CARTERET, N.J. -- Herman's Sporting Goods Inc. said Tuesday it acquired Gold Medal Sporting Goods, a 12-store chain in Philadelphia, for about $900,000. The deal strengthens Herman's 13-store presence in the Philadelphia/southern New Jersey market, the chain's second largest next to New York. The purchase is expected to add $22 million in sales and $1.3 million in earnings before interest and taxes to Herman's balance sheet this year. Herman's total sales in the Philadelphia area are projected at $60 million this year.
Herman's, which is reorganizing in Chapter 11, said it has already received bankruptcy court and creditors' committee approval on the deal.
Under the deal, Herman's will pay up to $300,000 to Gold Medal for costs associated with lease defaults, $235,000 to Clifford Epstein, owner of Gold Medal, $200,000 to Russell Corp., the owner of a $3.8 million secured claim against Gold Medal, plus certain other fees for miscellaneous assets.
Herman's also promised to place $1 million in orders with Russell in the three months ending September 1994.
Herman's said it expects also to pony up $3 million in remodeling expenses and $5 million in inventory expenses.