Finish Line Snaps Up Genesco

Imagine my surprise when I happened upon the news that Finish Line had purchased Genesco this morning. Now see, this is how a merger should be done--in the dark of the night with everyone stunned, amazed and slightly impressed when the news breaks out of nowhere. There shouldn't be never-ending gossip and speculation akin to rumors of Jay-Z and Beyonce getting married. Because it's like the boy who cried wolf, after a while you start feeling like you're getting played for a fool. Like, do Jay and Bee really wanna get married or do they just want to creat events to help sell records?? Like, did Foot Locker really wanna buy Genesco or did it just want shareholder to think it still had it like that?

As for the actual combo of Finish Line and Genesco, I sort of like it. Not as much as Nike and Converse or PPR and Puma, but it works. This is gonna be like one of those couples that from an outsiders view doesn't appear to perfectly click, but because they're different in the right ways, ultimately will help each other be better.

Foot Locker and Genesco: It's Over, Johnny!

Oh happy day. I just got this update:

Foot Locker said that today confirmed that it had made a proposal to Genesco Inc. to acquire all of the outstanding common stock of Genesco for $51 per share but that in light of Genesco's public release this morning, Foot Locker announced that it was no longer pursuing its proposal.

That slight tremor you just felt was all the employees of Genesco breathing a collective sigh of relief!

Foot Locker: Look Within, Grasshopper

It was revealed today that Foot Locker made another bid of $51/share for Genesco. For the past five days, Genesco has been trading for slightly above $51. I'm hardly an expert on these matters, but it looks to me given the current value of Genesco's stock that Foot Locker is still low-balling it. That at this point, it's making an offer just to save face.

I don't know what's up with Foot Locker. Here it is trying to buy another major retailer while just last week it announced that it was going to reduce planned openings of its newest retail concept, Footquarters, 'cause the stores it has opened thus far haven't done so hot. Plus, its own Foot Locker stores are looking half a mess.

Somehow these days, Foot Locker is reminding me of Lindsey Lohan's father (yep, that's him in the image above). Here's a guy who just got out of jail and has a stack of issues a mile deep, and yet somehow he feels qualified to advise his daughter--through press interviews no less--how she should straighten out her life. It's like, Mr. Lohan AND Foot Locker, the 12 steps, you might wanna park yourself at No. 4 for a minute. Need a reminder on what that step is? Here ya go: "Make a searching and fearless moral inventory of yourself." If you do that, you might realize that you're not exactly in a position to be meddling in the business of others.

Genesco After Shocks

We're going on about two months that rumors have been swirling around Genesco (note to casual readers: its most famous retail formats are Lids and Journeys) and at this point I'm thinking that the stress of all this b.s. is starting to take a toll on its employees, however small. I'd say all employees should either be treated to a free round at the local bar or a month of free yoga classes. Whatever is their pleasure.

The latest rumor is that a European private investment company is planning to buy Genesco and Skechers and then mush them together as one. WWD (Women's Wear Daily) is the source of this latest rumor and for all I know it is in general a rock solid source of this type of info, however, the last time I recall WWD being the source of a buyout rumor--that being Foot Locker going private--nothing ever came of it. As such, I'm not convinced that anything will come of this Skechers/Genesco thing. (Then again, maybe WWD was reporting what it knew to be the truth on that buyout and it just got screwed over by Foot Locker's slippery ways.)

Foot Locker and Genesco: Not Sitting in a Tree K-i-s-s-i-n-g

Having read through all the analysis of this soap opera, it's looking like it is FAR from over. It seems as though when Foot Locker first started wooing Genesco, it was talking up a big game in terms of how much it was willing to pay for the stock--$48-$50/share, but when it came time to step up to the plate, the offer came well below that range at $46/share. I can see how Genesco must have been miffed. It's kinda like the guy who promises to wine and dine you in the most fabulous restaraunt in town and he ends up taking you to Applebys. What??

Still, it could be possible that Genesco is interested but simply trying to set Foot Locker straight. It's like, I might be interested in you, but in the future you need to step up your game if you want to be with me and you BEST not take me to one of these tacky-ass restaurants again.

My favorite take on this whole mess comes from a Motley Fool analyst, who points out that Foot Locker has become like a tired old vampire, taking life from others to sustain its own:

But factor in reality--Foot Locker is stagnating, in need of help, and Genesco isn't--and, well, you have the reason for today's 15% uptick in Genesco. As I pointed out last week, Genesco is growing more quickly and sports better investment returns.

If I assume improvements in operations at Genesco, extrapolate cash flow growth, and then plug a few numbers into my "model" (fancy Wall Street slang for "make up some stuff and run it through a spreadsheet"), I can actually see Genesco making itself worth close to $55 a share on its own. Assume Foot Locker would be the beneficiary of more cost cutting and "synergies" (yuck--I'm sorry) and why shouldn't Genesco shareholders demand a 20% premium to that $55 intrinsic value estimate?

I say keep sticking it to 'em, Genesco holders. If Foot Locker really wants to take away your opportunities for the future, make 'em pay $66 a share.

So what do people think will happen? Some are saying that the deal with Foot Locker is eventually going to go down and that's it's all a matter of negotiating the right price. Other says that a private investment firm may step in and buy Genesco, which means that it won't be traded on Wall Street anymore.

As things stand now, Foot Locker's stock hasn't moved much, but Genesco's is waaay up. In fact, it's up about 22 percent since these rumors first started circulating in early April. Its price is so high now that some analysts are now rating it as overweight, which means they think its stock price doesn't reflect its real value now or, even with growth, its value in the short-term future.

Anyway, if it's not clear by now, I am 100 percent team-Genesco-fending-off-Foot Locker-forever. And no, I don't own stock in either company. On another note, it should also be clear by now that I find these inter-company battles very entertaining (though nothing since then has topped the war that went down between Foot Locker and Nike in 2003--that was an instant classic). Everybody tries to act all serious, but the human element is still there. You just have to dig a little harder to find it.

Genesco Tell Foot Locker to Back the Eff Off

Oh happy day. The news from the wire today is that Genesco rejected Foot Locker's buy out bid. I guess Genesco's CEO didn't appreciate being called out on the carpet (Genesco ignored Foot Locker's initial behind-the-scenes offer so Foot Locker CEO Matt Serra decided to go straight to the stockholders) by Foot Locker's CEO and he let him know what's what.

Here's the money quote, nice and simple:

Genesco said that after careful consideration, its board unanimously determined that Foot Locker's $46.00 per share cash proposal is not in the best interests of shareholders.

I said before that I thought this was a bad idea for all parties so I am pleased as all get out that Genesco threw up a Ben Wallace style block.

Foot Locker Trying to Buy Genesco: It Aint Over Yet

I told ya this was gonna get greasy:

So it turns out that the rumor of Foot Locker wanting to buy Genesco (you probably know this company from its Journey's or Underground Station stores) are true. What happened was that the CEO of Foot Locker, Matt Serra, made an offer earlier this month, which the CEO of Genesco, Hal Penningto, treated like an unsolicited email from a Nigerian investor. So Matt went and took his offer to the street so that the people could decide. 'Cause, after all, Genesco is a publically held company and as such the shareholders do have a say.

Here's the excerpt from the letter in which Matt snitches out Hal:

Serra wrote: "Given Genesco's failure to provide a substantive response to my April 4 letter and recent public speculation, we thought it would be best for both of our organizations, and our respective shareholders, to make our position public."

I have no idea how this deal is going to go down, but I will tell you that the thought of Foot Locker owning Genesco sickens me. And I am not unilaterally opposed to big companies expanding through purchases--it's the nature of the beast when you're a publically-held company: grow or die. For example, I think PPR's purchase of Puma will go down in history as a great one. Same with Nike and Converse. But Just like Adidas buying Reebok, something in my gut tells me that this move will ultimately not be a good one for any of the parties involved and for retail in general.

Foot Locker Trying to Snatch Genesco

Foot Locker has been in an expansive mood this year. First it tried to buy Famous Footwear, and when that didn't work out, it announced that it was going to open up its own chain of family footwear stores. Take that, Famous! And today I read in Footwear News that ole Foot Locker is trying to purchase Genesco, which is best known for its chain of Journey stores. Here's a snippet from the article:

New York-based Foot Locker is said to be preparing a tender offer for shares of Nashville-based Genesco in the $44 to $46 per-share range. The bid is expected to be announced soon, perhaps as early as this week, the sources said.

And so far, it looks like Genesco aint interested:

Financial sources also said Foot Locker has made some preliminary, exploratory contact with Genesco. They also said they expect Genesco to rebuff the tender offer, setting the stage for an old-fashioned heated fight for control of the footwear and accessories firm. Should Genesco turn the bid down, sources familiar with Foot Locker's plans said the footwear and apparel retailer might be prepared to go as high as $48 per share.

According to the article, supposedly Foot Locker wants Genesco for its Lids business, but I think it's Journeys that's bringing on the drool. Either way, being so heavily segmented in the malls of America strikes me as a rsiky move, but then again, if Foot Locker buys Journeys, it would have so much buying power that it could potentially bring competitors like Finish Line and PacSun to their knees.

Me personally, I'd hate to see this deal go down. Retail if anything needs an injection of upstart independents and Foot Locker is already too big and slow-moving. And it seems like a bad match from a company culture perspective, too. It's like Tom Cruise and Katie Holmes as a couple. They were both successful in their own right, but together they make ZERO sense.

Anyway people, if you stop by the snack counter the next time you come in, please bring me the biggest bucket of popcorn they got. And bring some napkins cuz I have a feeling this one could get greasy.

Foot Locker to Launch Family Footwear Chain

Footwear News magazine yesterday announced in a front-page story that Foot Locker will open a family footwear chain called Footquarters, starting with seven stores during the second week of April. According to Foot Locker CEO Matt Serra, the chain could grow to 600 to 1,000 stores over time. The company plans to end 2007 with 70 Footquarter stores nationwide.

A lot of people don't know this--including me--but Foot Locker once had a similar chain of stores run under its Kinney division, which it closed in 1998. At one time, the company operated 467 Kinney stores and 103 Footquarter stores.

If this plan doesn't tell you something about the said state of athletic footwear, I don't what would.