VF Corporation reported on March 14 a definitive agreement to buy Altra Footwear, the fast-growing American brand of sports shoes, from Icon Health & Fitness. Four days later, it announced the long-awaited sale of one of its remaining contemporary sportswear brands, Nautica, to the Authentic Brands Group (ABG).

VF said the acquisition will be immediately accretive to its earnings. The group didn't disclose the price it is paying for Altra, but we hear that it is close to $120 million, or more than twice its annual sales of nearly $50 million. Evidently, VF is projecting a further strong increase in its turnover under its ownership, similar to what Deckers Brands managed to do by acquiring Hoka One One, whose annual sales have grown from around $5 million to nearly $100 million since its first investment in the brand six years ago. An analyst reportedly projected a turnover of €200 million for Altra a few years from now.

Altra's sales amounted to only about $1 million when Icon bought that brand of “zero-drop” running shoes in 2012, three years after it was founded in a town that lies only about ten miles away from Icon's head office in Salt Lake City, Utah.

Well-informed sources tell us that Icon had a cash flow problem in financing Altra's exponential growth. Besides, it didn't quite master the design, product development, sourcing and marketing process because of its concentration on fitness equipment. Icon resorted to external designers to develop the footwear range.

The synergies between Altra's shoes and Icon's treadmills were minimal until they were partly bridged two years ago with the launch of the Altra IQ, a smart shoe with multiple sensors connected with iFit, Icon's digital platform for tracking and recommending the best suited fitness program to individual users (see SGI Europe Vol. 27 N° 1-2 of Jan. 13, 2016).

While widening the distribution to running specialty stores and multi-sport retailers, Altra continued to progress with its original focus on trail running, much like Hoka. It is an area where VF finds capabilities for further development in combination with brands like The North Face, leveraging its direct-to-consumer and international platforms to further boost its growth.

Icon said the sale of Altra will allow it to accelerate the growth of its core NordicTrack and ProForm brands, iFit and the Freemotion commercial business.

VF's takeover is expected to be completed by April 5, according to internal sources. They say that Altra will continue to be housed at Icon's headquarters in the Salt Lake City area, with its staff of 65 employees including the brand's founder, Golden Harper. It should continue with its current international sales structure for about 12 months, pending a review of the business and the opportunities for integration.

Altra shoes are currently sold through more than 1,600 specialty retail locations worldwide and through its e-commerce platform. In Europe, where sales have reached an annual level of around €8 million, the brand is mainly sold through running specialty stores and a few generalist retailers such as XXL.

Wells Fargo Securities served as exclusive financial adviser and Davis Polk & Wardwell as legal advisory to VF in the transaction. Davis Polk also worked together with BofA Merrill Lynch for the sale of Nautica.

As part of the ongoing realignment of its brand portfolio, which saw most recently the sale of Majestic and Jansport and the acquisition of Dickies and Icebreaker, VF also announced a definitive agreement for the sale of Nautica to ABG, the company run by Jamie Salter, which owns and mostly licenses more than 30 other consumer brands.