Hidefumi Hommyo got an unusual start in the sneaker business. A native of Japan who became acquainted with the US while studying at Temple University in Philadelphia, Hommyo realized sneakers that were rare in Japan could be found easily, and cheaply, in the US. He made trips up and down the east coast in the mid-1990s, scouring basements and garages for shoes such as the original Nike Air Jordan 1 from 1985 or the Nike Air Force 1 from 1982. He would buy them for just $15 or $20 a pair, he recalled on a podcast last year, and sell them for $400 at his stores in Japan, where streetwear and sneaker fandom were starting to take off.
Hommyo caught Nike’s notice, and when he opened his next shop, atmos, as a traditional retailer in the backstreets of Tokyo’s Harajuku neighborhood in 2000, Nike was his first vendor. Since, atmos has built a global profile among sneaker fans, largely with its sought-after collaborations with sneaker makers. It now has 49 stores, including 10 outside Japan in cities such as New York, and a substantial digital business.
Its success has attracted another big name in sneakers: Foot Locker today announced it is acquiring atmos for $360 million.
The purchase gives Foot Locker a “strategic foothold in Japan,” the company said, a market it estimates to be worth $6 billion. Atmos, focused on a niche of young, discerning shoppers, owns just a slice of that. Its sales last year were approximately $175 million, according to the announcement. But the deal still helps Foot Locker expand in the fast-growing Asian market, and further into the premium end of sneakers and streetwear.
While Foot Locker has a global footprint, it’s still primarily a US business. As of Jan. 30, 2021, it had nearly 2,000 stores in the US and its territories across its various store brands, which include Foot Locker as well as offshoots such as Kids Foot Locker and chains such as Champs and Footaction. Foot Locker specifically had 848 US stores. Foot Locker Asia, on the other hand, had just 20 stores. (The company doesn’t break those out by country.)
Atmos immediately increases Foot Locker’s presence in the world’s third largest economy. Foot Locker will also benefit from atmos’s digital channels, which generated more than 60% of its sales last year.
At the same time, Foot Locker pointed to atmos’s distinct brand and “potential for Foot Locker, Inc. collaborations” as strategic benefits in a presentation about the deal prepared for analysts. Atmos is known in the world of sneakers and streetwear for its taste and for co-producing some of the most sought-after collaborations on the market. Foot Locker is more a mass retailer, though one that’s made itself a destination for sneakerheads through its releases of sneakers such as Jordans and Yeezys. By acquiring atmos, Foot Locker gets its cultural credibility in sneakers and streetwear, while Foot Locker also apparently sees potential to use atmos’s expertise to launch its own collaborations.
Foot Locker announced another purchase, too. It’s buying WSS, a regional retailer with 93 off-mall stores around the southwestern US, where Foot Locker says it has room to grow. Those stores are generally not in malls, too, which could help at a moment when malls, where Foot Locker has many of its US stores, are seeing traffic declines. Importantly, WSS also has a strong following among Latino shoppers, a demographic group with growing spending power.
Foot Locker paid $750 million for the company, which generated $425 million in sales in its 2020 fiscal year.