Feb 26 (Reuters) - Activist hedge fund Legion Partners LLC will pressure U.S. footwear retailer Genesco Inc to sell assets beyond its Lids Sports Group business, and could challenge its board if it does not do so, people familiar with the matter said on Monday.
Legion Partners, which together with investment firm 4010 Partners LP owns 5.3 percent of Genesco, wrote to the company's board of directors on Monday asking it to carry out a full review of strategic alternatives, the sources said.
Genesco announced earlier this month that it would explore a sale of Lids, its team sports merchandise and headwear business that has struggled under fierce price competition. However, it stopped short of exploring a sale of the rest of its businesses.
Legion Partners told Genesco on Monday that if the company refused to explore all its options and did not commit to returning cash to shareholders, it might nominate a slate in April to its board of directors, the sources said.
The sources asked not to be identified because the matter was confidential. Genesco did not immediately respond to a request for comment.
Based in Nashville, Genesco retails casual and dress footwear, headwear, sports apparel and accessories in the United States, Canada, Britain and Ireland. Besides Lids, the company owns footwear retailers Journeys, Johnston & Murphy and Schuh.
Legion Partners believes that by divesting Johnston & Murphy and Schuh, Genesco could be worth $68 per share, according to the sources. The company's shares ended trading on Monday at $39.70, giving it a market capitalization of $791 million.
Johnston & Murphy, which has been making shoes for U.S. Presidents starting with Millard Fillmore in the mid-19th century, could appeal to retailers such as Steve Madden and Michael Kors Holdings Ltd, as well as private equity firms, according to the sources.
Private equity firm Brentwood Associates sold men's footwear and accessories retailer Allen Edmonds Corp for $255 million to Caleres Inc in December 2016 after acquiring it in 2013 from another private equity firm, Goldner Hawn Johnson & Morrison, for about $180 million.
Schuh, a specialty retailer of casual and athletic footwear based in Britain that Genesco acquired in 2011, could appeal to private equity firms and retailers active in Europe, according to the sources. (Reporting by Greg Roumeliotis and Harry Brumpton in New York)