Related-Party Transactions

9 Months Ended

Oct. 31, 2020

Related Party Transactions [Abstract]

Related-Party Transactions

Related-Party Transactions

The Company leases one store under a lease arrangement with AL Florence Realty Holdings 2010, LLC, a wholly owned subsidiary of Books-A-Million, Inc. (BAMM). One of our Directors, Terrance G. Finley is an executive officer of BAMM. Minimum annual lease payments are $0.1 million, if not in co-tenancy, and the lease termination date is February 2022. Minimum lease payments remaining under this lease at October 31, 2020 and November 2, 2019 were $0.1 million and $0.2 million, respectively.

The Company honored certain contracts in place for its wholly owned subsidiary, City Gear, LLC, upon acquisition. The following listing represents those contracts of which Michael E. Longo, the Company's President and CEO, has an interest in, either directly or indirectly:

Memphis Logistics Group (MLG)

MLG provides logistics and warehousing services to City Gear. Mr. Longo owns a majority interest in MLG and the initial contract term was effective through June 2020 but has been extended to June 2021. In the 13-weeks ended October 31, 2020 and November 2, 2019, payments to MLG under the contract were $2.2 million and $1.7 million, respectively. In the 39-weeks ended October 31, 2020 and November 2, 2019, payments to MLG under the contract were $5.6 million and $5.7 million, respectively. The amount outstanding to MLG at October 31, 2020, February 1, 2020 and November 2, 2019 was $0.2 million, $0.5 million and $0.4 million, respectively, and is included in accounts payable on our unaudited condensed consolidated balance sheets.

T.I.G. Construction (TIG)

TIG historically performed the majority of new store and store remodel construction for City Gear and is owned by a close relative of Mr. Longo. For the 13-weeks ended October 31, 2020 and November 2, 2019, payments to TIG for its services were $1.4 million and $1.0 million, respectively. In the 39-weeks ended October 31, 2020 and November 2, 2019, payments to TIG for its services were $3.7 million and $2.5 million, respectively. The amount outstanding to TIG at October 31, 2020, February 1, 2020 and November 2, 2019 was approximately $0.1 million in each period, and is included in accounts payable on our unaudited condensed consolidated balance sheets.

Merchant's Capital (MC)

Merchant's Capital owned the office building where City Gear had its corporate offices in Memphis, Tennessee. Mr. Longo is a 33.3% partner in MC. The initial lease term ended on December 31, 2019 but was extended to April 30, 2020 to allow for the transition of City Gear's corporate office to the Company's Birmingham, Alabama headquarters. In the 13-weeks ended October 31, 2020, there were no minimum lease payments to MC. In the 13-weeks ended November 2, 2019, minimum lease payments to MC were $0.1 million. In the 39-weeks ended October 31, 2020 and November 2, 2019, minimum lease payments to MC were $0.1 million and $0.2 million, respectively. There were no minimum lease payments remaining under this lease at October 31, 2020. There were no amounts outstanding to MC at October 31, 2020, February 1, 2020 or November 2, 2019.

In addition to the related party interests listed above, Mr. Longo also has a membership interest in the earnout discussed in Note 4 - Fair Value of Financial Instruments. Pursuant to the Membership Interest and Warrant Purchase Agreement dated October 29, 2018, and based on Fiscal 2020 financial results, the former members and warrant holders of City Gear were entitled to and were paid the first earnout payment of $10.0 million on June 1, 2020. Mr. Longo's share was approximately 22.8% of any earnout payment or approximately $2.3 million of the initial earnout payment. If the maximum remaining earnout payment of $15.0 million is achieved based on Fiscal 2021 financial results, Mr. Longo will be entitled to an additional $4.4 million to be paid in Fiscal 2022.