Global Sports, Inc., the company that owns footwear brands RYKA, Yukon, and Apex; and an off-price footwear, sporting goods, and apparel business, bought Gen-X holdings in early May. The purchase was for 1.5-million of shares Global Sports common stock and five-million dollars in cash, payable at one-million dollars per year over a five-year period, contingent upon achieving certain sales and gross-profit targets.
Gen-X was started and owned by Jamie Salter, former founder and president of Ride Snowboards. Gen-X specializes in selling off-price sporting-goods and winter-sports equipment, in-line skates, sunglasses, skateboards, and specialty footwear. For the year ended September 30, 1997, the Gen-X Companies had revenues of approximately 31-million dollars and net income of approximately two-million dollars.
Gen-X CEO Salter and President/CFO Kenny Finkelstein will be joining Global Sports and together will manage the combined off-price/action-sports business of Gen-X and Global Sports.
“We’re very excited about the acquisition of the Gen-X Companies, as this creates a diversified off-price business encompassing footwear, apparel, and sporting goods, with a substantially expanded customer and vendor base,” says Michael Rubin, president and CEO of Global Sports, Inc.
“The ability for Global Sports to grow beyond the confines of our niche is a function of having the management resources to grow the off-price and branded businesses simultaneously,” he continues. “With this acquisition, we now have in place the management team to grow the off-price business, while our existing management team and I focus our efforts on the branded business, particularly the Yukon and RYKA brands.
“The acquisition of the Gen-X Companies creates a great business opportunity and terrific synergy among Global Sports, the Gen-X Companies, and their customers,” Rubin says. “Global Sports will gain additional hardgoods to satisfy the demand of our customers. Similarly, the Gen-X Companies will immediately have the footwear merchandise of Global Sports to offer its customers.”
Salter and Finkelstein issued a joint statement, saying, “The combination of the Gen-X Companies with Global Sports will create one of the largest, most comprehensive off-price branded footwear and hardgoods distributors in North America. Combining our business with Global Sports is a perfect strategic fit that enables both parties and their respective management teams to optimize the combined entities’ economies of scale.”
Salter adds, “We’ve built a good company with great people around me.”
While Salter gained his recognition in the snowboarding industry by working at Kemper, then as a founder at Ride, he had more recently been doing business with his company CAS Sports (which later became Gen-X) dealing in close-out products and distributing brands to large-format retailers.
He currently sees the snowboard side as a healthy, but not large part of his business-probably only ten-percent total. “There’s way less product available in closeouts,” he says. “It’s not out there.”
Gen-X distributes Rage and Vision snowboard products, among others, to large-format retailers. “We’re legitimizing snowboards for them,” he says. “Snowboards are clearly at a price they certain retailers can carry, but still not a commodity. We’re doing what these customers want to make them happy carrying the products. We’re doing things like UPC coding for them.”
Salter believes that the off-price business of the two companies together will total approximately 75-million dollars, with the action sports business about 25- to 30-million of that.