FOOT LOCKER ACQUIRED ATMOS FOR USD 360 MILLION

©Atmos

Foot Locker announced it is acquiring atmos for USD 360 million to give them a strategic foothold in Japan, a market it estimates to be worth USD 6 billion. Atmos, focused on a niche of young, discerning shoppers, owns just a slice of that. Its sales last year were approximately USD 175 million. But the deal will still help Foot Locker expand in the fast-growing Asian market, and further into the premium end of sneakers and streetwear.

Hidefumi Hommyo, founder of atoms, got an unusual start in the sneaker business. A native of Japan who became acquainted with the US while studying at Temple University in Philadelphia, Hommyo realized sneakers that were rare in Japan could be found easily, and cheaply, in the US. He made trips up and down the east coast in the mid-1990s, scouring basements and garages for shoes. He would buy them for just USD 20 a pair, and sell them for USD 400 at his stores in Japan, where streetwear and sneaker fandom were starting to take off.

Hommyo caught Nike’s notice, and when he opened his next shop, atmos, as a traditional retailer in the backstreets of Tokyo’s Harajuku neighborhood in 2000, Nike was his first vendor. Since, atmos has built a global profile among sneaker fans, largely with its sought-after collaborations with sneaker makers. It now has 49 stores, including 10 outside Japan in cities such as New York, and a substantial digital business.

While Foot Locker has a global footprint, it’s still primarily a US business. It had nearly 2,000 stores in the US and its territories across its various store brands, which include Foot Locker as well as offshoots such as Kids Foot Locker and chains such as Champs and Footaction. Foot Locker had 848 US stores, but on the other hand, had just 20 stores in Japan. So, Atmos immediately increases Foot Locker’s presence in the world’s third largest economy. Foot Locker will also benefit from atmos’s digital channels, which generated more than 60% of its sales last year.

At the same time, Foot Locker pointed to atmos’s distinct brand and “potential for Foot Locker collaborations” as strategic benefits in a presentation about the deal prepared for analysts. Atmos is known in the world of sneakers and streetwear for its taste and for co-producing some of the most sought-after collaborations on the market. Foot Locker is more a mass retailer, though one that’s made itself a destination for sneakerheads through its releases of sneakers such as Jordans and Yeezys. By acquiring atmos, Foot Locker gets its cultural credibility in sneakers and streetwear, while Foot Locker also apparently sees potential to use atmos’s expertise to launch its own collaborations.