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Acquisition

12 Months Ended

Jan. 29, 2022

2. Acquisitions

WSS

Effective September 18, 2021, the Company, through its wholly-owned subsidiary Foot Locker Retail, Inc., acquired 100% of the shares of Eurostar, Inc., a Delaware corporation operating as WSS (“WSS”). WSS is a U.S.-based off-mall athletic footwear and apparel retailer, focused on the Hispanic consumer, which operated 93 stores at the acquisition, primarily on the West Coast. The aggregate purchase price for the acquisition was $807 million ($737 million paid in 2021, net of cash acquired) subject to the finalization of the value of net assets acquired and was funded with available cash. We believe that this acquisition enhances our growth opportunities in North America and creates further diversification and differentiation in terms of both customers and products. The results of WSS are included in our consolidated financial statements since the acquisition date.

atmos

Effective November 1, 2021, the Company, acquired certain entities collectively operated as atmos, headquartered in Japan. atmos is a digitally led, culturally-connected global brand featuring premium sneakers and apparel, an exclusive in-house label, collaborative relationships with leading vendors in the sneaker ecosystem, experiential stores, and a robust omni-channel platform. The aggregate purchase price for the acquisition was $360 million ($319 million paid in 2021, net of cash acquired) subject to adjustment for the finalization of the value of net assets acquired and was funded with available cash. The preliminary purchase price includes contingent consideration initially measured at $35 million, which can reach up to $111 million based on achieving certain revenue growth and EBITDA performance targets. The results of atmos are included in our consolidated financial statements since the acquisition date.

The following table represents the preliminary allocation of the purchase price for WSS and includes fair value adjustments to certain assets and liabilities since our most recent interim report. Goodwill was reduced from $494 million reported at the end of the third quarter to $401 million, primarily related to higher valuation of the tradenames. The adjustments did not have a significant effect on the consolidated results of operations. We determined that the WSS tradename will have an indefinite life and will not be amortized. The proforma effects of the acquisition have not been presented, as their effects were not significant to the consolidated results of operations.


($ in millions)
Assets acquired:
Cash and cash equivalents	$	70
Merchandise inventories		82
Other current assets		10
Property and equipment, net		133
Operating lease right-of-use assets		143
Tradenames		296
Customer relationships		13
Other assets		4
Liabilities assumed:
Accounts payable	$	(58)
Current portion of obligations under finance leases		(3)
Current portion of lease obligations		(19)
Long-term portion of obligations under finance leases		(50)
Long-term lease obligations		(127)
Deferred taxes		(84)
Other liabilities		(4)

Goodwill		401
Total purchase price	$	807

The table below summarizes the preliminary allocation of the purchase price to the fair value of assets acquired for atmos using the exchange rate in effect as of the date of the acquisition. The allocation of the purchase price shown in the table below is preliminary and subject to change based on the finalization of the purchase price and our detailed valuations, including the final valuations of atmos tradenames, other intangibles, inventory, and leases. We determined that the atmos tradenames will have an indefinite life and will not be amortized. The proforma effects of the acquisition have not been presented, as their effects were not significant to the consolidated results of operations. We are assessing the tax deductibility of the goodwill related to the acquisition.


($ in millions)
Assets acquired:
Cash and cash equivalents	$	6
Merchandise inventories		22
Other current assets		12
Property and equipment, net		7
Operating lease right-of-use assets		47
Tradenames		135
Other assets		6
Liabilities assumed:
Accounts payable	$	(10)
Current portion of lease obligations		(10)
Other current liabilities		(8)
Long-term lease obligations		(35)
Deferred taxes		(46)
Other liabilities		(8)

Goodwill		242
Total purchase price ⁽¹⁾	$	360

(1)	Total purchase price consists of $325 million in cash and $35 million of contingent consideration.