Related-Party Transactions

12 Months Ended

Feb. 01, 2020

Related Party Transactions [Abstract]

Related-Party Transactions

RELATED-PARTY TRANSACTIONS

The Company leases one store under a lease arrangement with AL Florence Realty Holdings 2010, LLC, a wholly owned subsidiary of Books-A-Million, Inc., (BAMM).  One of our Directors, Terrance G. Finley is an executive officer of BAMM.  Minimum annual lease payments are $0.1 million, if not in co-tenancy, and the lease termination date is February 2022.  In Fiscal 2020, Fiscal 2019 and Fiscal 2018, minimum lease payments were $0.1 million.  Minimum lease payments remaining under this lease at February 1, 2020 and February 2, 2019 were $0.2 million and $0.3 million, respectively.

The Company honored certain contracts in place for its wholly owned subsidiary, City Gear, LLC., upon acquisition. The following listing represents those contracts of which Michael E. Longo, the Company's President and CEO, has an interest in, either directly or indirectly:

Memphis Logistics Group (MLG)

MLG provides logistics and warehousing services to City Gear. Mr. Longo owns a majority interest in MLG and the existing contract is effective through June 2020. The supply chain and logistic transition is currently in the planning stages. In Fiscal 2020 payments to MLG under the contract were $7.2 million. The amount outstanding to MLG at both February 1, 2020 and February 2, 2019 was $0.5 million and is included in accounts payable on our consolidated balance sheets.

T.I.G. Construction (TIG)

TIG historically performed the majority of new store and store remodel construction for City Gear and is owned by a close relative of Mr. Longo. These functions are currently being transitioned to the Company's property management department. In Fiscal 2020, payments to TIG for their services were $3.8 million. The amount outstanding to TIG at both February 1, 2020 and February 2, 2019 was $0.1 million and is included in accounts payable on our consolidated balance sheets.

Merchant's Capital (MC)

Merchant's Capital owns the office building where City Gear has its corporate offices in Memphis, Tennessee. Mr. Longo is a 33.3% partner in MC. The initial lease term ended on December 31, 2019 but has been extended to April 30, 2020 to allow for the transition of their corporate office to our Birmingham, Alabama location. In Fiscal 2020, minimum lease payments to MC were $0.3 million. Minimum lease payments remaining under this lease at February 1, 2020 were $51.2 thousand. There were no amounts outstanding to MC at February 1, 2020 or February 2, 2019.

In addition to the related party interests listed above, Mr. Longo also has a membership interest in the Earnout discussed in Note 3 - Acquisition, to these financial statements. Pursuant to the Membership Interest and Warrant Purchase Agreement dated October 29, 2018 and based on Fiscal 2020 financial results, original members and warrant holders of City Gear are entitled to the first earnout payment of $10.0 million payable within 45 days after the finalization and receipt of the Company's audited consolidated financial statements for each measurement period. Mr. Longo is entitled to approximately 22.8% of any earnout payment or up to $2.3 million in Fiscal 2021. If the maximum remaining Earnout payment of $15.0 million is earned based on Fiscal 2021 financial results, Mr. Longo would be entitled up to an additional $4.4 million payable in Fiscal 2022.