City Sports Announces Acquisition and Strategic Investment from the Highland Consumer Fund

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Growth capital and retail expertise to help drive next wave of expansion. John Burns and Ted Philip join company's board of directors.

Growth capital and retail expertise to drive next wave of expansion

Boston, MA – March 11, 2008 – City Sports today announced its acquisition and a substantial growth equity investment by the Highland Consumer Fund. The move will enable City Sports to further invest in its growth strategy and enhance its leadership position in the specialty sports retailing industry. In conjunction with the investment, John Burns and Ted Philip of the Highland Consumer Fund, and Marty Hanaka, former CEO of The Sports Authority, will join the company’s board of directors.

“The Highland Consumer Fund is the perfect partner for us at this stage of the company’s growth,” said Mike Kennedy, Founder and CEO of City Sports. “We’ve proven that we can successfully expand our unique concept to metropolitan centers across the East Coast. Highland’s expertise in retailing and scaling consumer-facing enterprises is unrivalled in the industry and will be instrumental as we continue to pursue our expansion strategy.”

City Sports has developed the premier retail concept for the athletic metropolitan adult. The brand began in 1983 in Boston and has grown to an award-winning specialty retailer with 14 locations in six major East Coast cities. "The company's merchandise mix consisting of premium and specialty brands with special focus on running, triathlon and fitness creates a one stop shop for our active city customers," said Jeff Connor, City Sports President.

"City Sports focuses on highly visible and vibrant locations. As a specialty retailer, we pride ourselves on customer service, and we direct our marketing efforts to community based grassroots events. We can be found at local road races, triathlons and partnering with local health clubs," said Sean Scales, Chief Operating Officer of City Sports.

“City Sports has built an unrivaled sports retailing franchise serving metropolitan centers,” said John Burns, General Partner with the Highland Consumer Fund. “We believe the company is perfectly positioned for continued expansion. We’re excited to be part of the team and look to apply our expertise in helping the company grow while preserving the values, management team and industry-leading commitment to customer service that have driven City Sports’ success over the years.”

The Highland Consumer Fund specializes in consumer products, services and retail investment opportunities in growth-focused companies with proven business models operating in attractive markets. The Fund brings together an investment team with extensive experience founding, growing, operating and investing in successful consumer companies. It also offers companies a unique value proposition through the hands-on guidance and active involvement of four consumer domain experts. Each of these experts specializes in key areas that virtually every consumer company finds challenging: IT Systems, Marketing, Merchandising and Real Estate.

About City Sports
City Sports is an award-winning, specialty sports retailer. The company was founded in 1983 by Mike Kennedy and Eric Martin, opening the first store on Massachusetts Avenue in Boston. The company now operates 14 retail stores in metropolitan locations in Boston, Providence, New York, Washington D.C., Philadelphia, Baltimore and Atlanta as well as online at City Sports caters to the athletic adult who lives, works or studies in the city. Its product assortment stresses performance selection in footwear, apparel and equipment, geared towards running, triathlon, fitness, racquet sports, swim and outdoor.

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