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Acquisition of Rogan Shoes | 6 Months Ended
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Aug. 03, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisition of Rogan Shoes | Note 2 - Acquisition of Rogan Shoes On February 13, 2024, we acquired all of the stock of Rogan Shoes, Incorporated, a privately-held 53-year-old work and family footwear company incorporated in Wisconsin (“Rogan’s”) for an adjusted preliminary purchase pric e of $44.8 million, net of $2.2 million of cash acquired, of which $44.4 million has been paid to date from cash on hand. The adjusted preliminary purchase price is subject to customary adjustments. Additional consideration of up to $5.0 million may be paid by the Company subject to the achievement of three-year performance targets. At the time of the acquisition, Rogan’s operated 28 store locations in Wisconsin, Minnesota and Illinois. The Rogan’s acquisition advanced our strategy to be the nation’s leading family footwear retailer. It immediately positioned us as the market leader in Wisconsin, and it established a store base in Minnesota, creating additional expansion opportunities. Rogan’s results were included in our consolidated financial statements since the acquisition date. Net Sales from our newly acquired Rogan’s operations totaled $22.0 million in the thirteen weeks ended August 3, 2024 and $41.6 million from February 13, 2024 through August 3, 2024. For the thirteen and twenty-six weeks ended August 3, 2024, acquisition-related costs of $97,000 and $418,000, respectively, were expensed as incurred and were included in Selling, General and Administrative Exp enses. The following table summarizes the preliminary purchase price and the allocation of the preliminary purchase price to the fair value of the assets acquired and liabilities assumed. We measured these fair values using Level 3 inputs. The excess purchase price over the fair value of net assets acquired was allocated to Goodwill. The allocation of the purchase price shown in the table below is preliminary and subject to change based on the finalization of our detailed valuations and any subsequent change in the purchase price. The final determination of the fair values and related impacts will be completed as soon as practicable and within the measurement period of up to one year from the acquisition date.
(In thousands) |  |  |
Preliminary purchase price: |  |  |
Cash consideration, net of cash acquired |  | $ | 44,828 |
Fair value of contingent consideration |  |  | 3,600 |
Total preliminary purchase price |  | $ | 48,428 |
Fair value of identifiable assets and liabilities: |  |  |
Accounts receivable |  | $ | 2,365 |
Merchandise inventories |  |  | 42,340 |
Other assets |  |  | 3,763 |
Operating lease right-of-use assets |  |  | 16,891 |
Identifiable intangible assets |  |  | 8,400 |
Goodwill |  |  | 3,352 |
Total assets |  | $ | 77,111 |
Accounts payable |  |  | 6,308 |
Operating lease liabilities |  |  | 19,843 |
Accrued and other liabilities |  |  | 2,532 |
Total liabilities |  | $ | 28,683 |
Total fair value allocation of preliminary purchase price |  | $ | 48,428 |
Our fair value estimate of the Merchandise Inventories for Rogan’s was determined using the Comparative Sales and Replacement Cost methods. Our fair value estimate of the contingent consideration for the Rogan’s acquisition was determined using a Monte Carlo simulation and other methods that account for the probabilities of various outcomes and was recorded in Other long-term liabilities. Significant assumptions used for the valuation include the discount rate, projected cash flows and calculated volatility. Our fair value estimate related to the identified intangible asset of Rogan’s trade name was determined using the Relief from Royalty method, and the significant assumptions used for the valuation include the royalty rate, estimated projected revenues, long-term growth rate and the discount rate. Our fair value estimates related to Rogan’s customer relationships were determined using the Multi-Period Excess Earnings method, and the significant assumptions used for the valuation include projected cash flows, the discount rate and customer attrition rate. Identifiable intangible assets include Rogan’s trade name and customer relationships. We assigned an indefinite life to Rogan’s trade name; therefore, Goodwill and Rogan’s trade name will be charged to expense only if impaired. Impairment reviews will be conducted at least annually and involve a comparison of fair value to the carrying amount. If fair value is less than the carrying amount, an impairment loss would be recognized in Selling, General and Administrative Expenses. Customer relationships are subject to amortization and will be amortized over a period of 20 years. Goodwill and the acquisition-related Intangible Assets will not be deductible for tax purposes.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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