Footwear merchant RCG, owner of the Athlete's Foot running shoe chain, is pursuing trendy youngsters with a taste for limited edition sneakers after snapping up hip sneaker business Hype DC.
RCG Corporation has agreed to pay $105 million for Hype DC, which targets trendy 15 to 25 year olds.
Hype sells premium, exclusive and limited edition sneakers from the world's leading brands, including Nike, Adidas and Converse.
The deal, set to settle in August, comes 18 months after RCG acquired the Accent Group - distributor of Vans, Skechers and Dr. Martens and owner of the Platypus retail chain.
RCG chief executive Hilton Brett said fiscal 2016 was a watershed year with the company's profits and share price rising dramatically because of the $200 million Accent acquisition.
And he expects the acquisition of Hype, which adds 60 stores to the group, will have a similar effect.
Shares in RCG rocketed 24.3 per cent, or 35.5 cents, to $1.815 on Monday on the Hype deal and the company's stronger full-year earnings outlook.
"Hype is an outstanding business," Mr Brett said.
"It is slightly more premium and more fashion forward, in terms of leading edge, than the Platypus business."
Hype founders Danny and Cindy Gilbert will continue to head the business, with Mr Gilbert joining RCG's board as an executive director.
The couple founded the business in Sydney in 1998 after having travelled the world and spotted an opportunity in the sneakers space.
They have since grown it to 57 Hype stores and three Shubar stores.
In an update to the market on Monday, RCG said its FY16 underlying earnings before interest, tax, depreciation and amortisations (EBITDA) is likely to be $60 million; at the top-end of its guidance range.
Underlying earnings in FY17, including the Hype DC deal, are expected to come in at $90 million.
Hype made $120 million in revenue in FY16.
It is expected to generate same-store-sales growth of five per cent in FY17, higher than Athlete's Foot's four per cent forecast, while Accent Group's same-store-sales are tipped to rise seven per cent.
