Cherokee Global Brands (CGB), a U.S. company that agreed a few weeks ago to take over nearly all of the assets of Hi-Tec International and turn it into a licensing operation, says it has already sealed licensing agreements with Carolina Footwear for the U.S. and Canada, and the Batra Group for the U.K. and several other European countries.
CGB said at the time of the deal, stipulated for an aggregate cash purchase price of about $95.8 million, that it would substantially sell all assets relative to Hi-Tec's wholesale operations to new operating partners who would enter into licensing agreements with Hi-Tec.
The master licensing agreement with Batra allows the group to manufacture and sell a wide range of branded footwear in the U.K., Ireland, the Benelux and German-speaking countries, France, Scandinavia and Finland. Batra said that it would continue to sell Hi-Tec predominantly through outdoor stores, and through retail partners such as Blacks in the British market. A second licensing agreement allows Batra to source and distribute apparel and accessories in parts of Western Europe and the Middle East. The Batra Group has created a new London-based company, Hi-Tec Europe, to manage these licenses.
Rajiv Batra, chairman of the Batra Group, said it was targeting annual sales growth of about 20 percent compared with the current European turnover, while investing strongly in the Hi-Tec brand. Apart from the focus on the outdoor business, this should include continued support for Hi-Tec in the walking shoe market and renewed investments in court sports, the category that got Hi-Tec started in 1974 with a best-selling squash shoe. Batra intends to take over Hi-Tec's small, existing apparel range and to launch a full range for spring summer 2018.
As part of the deal, Batra is taking over the Hi-Tec office and warehouse in Southend-on-Sea, which served as the group's head office until it moved to Amsterdam in 2011. Cherokee and Batra indicate that the leadership team of Hi-Tec UK has agreed to transition to the Batra Group, with Ian Cameron as managing director for Europe. He already held this function for footwear and his role has been widened to include the distribution of Hi-Tec apparel.
Separately, Batra is set to establish a global apparel and accessory design center for the Hi-Tec and Magnum brands in London, supervised by the Batra Group. The center is meant to service other licensees for these products around the world. Batra has its own production plants in India, along with sourcing partners in other Asian countries.
Future Brands, a British arm of the Batra group, has licensing agreements to sell apparel with the Russell Athletic brand in Europe, the Middle East, Africa and India. About two years ago it signed another licensing deal to sell the Lotto brand in the U.K. and Ireland. Another subsidiary of the Indian Batra Group had a license for Fila throughout Europe, the Middle East, Africa (EMEA) and India, but the group is now a sub-licensee of JD Sports Fashion for Fila in the U.K. Again separately, the Batra Group still owns rights to the Fila brand in the Middle East and India.
The master franchising agreement with Carolina Footwear for the U.S. gives it the right to manufacture and sell Hi-Tec and Magnum-branded footwear for men, women and children, along with extra products in the adult outdoor and active footwear categories. Simon Bonham, brand president for Hi-Tec Sports North America, described the deal as a complementary partnership for the group, which would enable it to continue the market share gains of the last three years. Hi-Tec says that Bonham will remain in place along with other managers, although details have to be worked out with regard to infrastructure in North America.
While finalizing the tie-up with Cherokee, Hi-Tec Sports International retained or negotiated new licensing agreements for footwear, apparel and accessories with several other entities. They include Hi-Tec Sports in South Africa, which was taken over by Frank van Wezel, the founder of Hi-Tec, covering all Africa apart from the Mediterranean seabord. Another is Martes Sports in Poland, a distributor and licensee, which has turned into one of the leading sports retailers in Poland, and whose broader partnership with Hi-Tec is unchanged.
Then there is Spain: Hi-Tec says that Roberto Fernandez, who has been the managing director of Hi-Tec España for the last ten years, has bought the business with a long-term distributor and licensing agreement for Iberia. The Fernandez family has a long-term relationship with Hi-Tec since Cato Fernandez, Roberto's father, previously ran the business in the region for two decades.
The situation apparently remains unchanged in several other European markets. Paul Brooks remains in charge of Hi-Tec's French office in the Chamonix valley. Sports and Adventure is staying in place as distributor for both the Hi-Tec and Magnum brands in Italy. However, Batra says that the group has rights to study some European markets not currently covered by its footwear license and to come forward with a plan.
Separately, Hi-Tec Sports International has teamed up with Advanced Manufacturing Group as the master licensee for the Interceptor brand, which focuses on tactical, military and work footwear for Walmart in the U.S. and Canada.
When it unveiled the takeover agreement, CGB anticipated that Hi-Tec would deliver about $19 million worth of licensing revenues and $7 million in adjusted operating profit for the first full fiscal year after the closing of the deal. CGB said that Hi-Tec recorded sales of $143 million last year, mostly from the Hi-Tec and Magnum brands, and it referred to global brand sales estimates of $288 million in 2015.
Hi-Tec's head office is due to remain in Amsterdam with the management team led by Ed van Wezel, who will continue as chief executive of Hi-Tec in the CGB group. CGB sells several other active leisure brands such as Cherokee, Tony Hawk and Sideout, and it boasts license and franchise agreements with leading retailers and manufacturers in more than 50 countries.
