Town Shoes minority stake bought by U.S. chain DSW
Designer Shoe Warehouse operator pays $68M for 44% of Canadian shoe chain
U.S. shoe store chain DSW Inc. has become the latest retailer to forge into the Canadian market with the purchase of a 44 per cent stake in Town Shoes Ltd. for $68 million.
Town Shoes is Canada’s largest chain of shoe stores with 182 locations, including The Shoe Company and Shoe Warehouse.
DSW, which runs Designer Shoes Warehouse, has bought the stake in Town Shoes formerly owned by Alberta Investment Management Corp. It also has the right to buy a further stake in the company from minority shareholders.
DSW has been looking to break into Canada for a long time according its president and CEO Mike MacDonald.
"Our partnership provides us a unique opportunity to bring DSW into Canada through Town Shoes' platform," MacDonald said in a statement.
The Canadian discount retail environment has become super competitive with the entry of Target and expansion of Wal-Mart.
Town Shoes had sales of $291 million in 2013. DSW operates 394 stores in 42 states and had earnings of $601.4 million US in the first quarter of 2014.
The other main shareholder in Town Shoes is private equity firm Callisto, which has agreed to the deal and has the option to sell the balance of the Canadian chain to DSW after three years based on a pre-determined formula.
With files from the Canadian Press