10 hours ago
Dick’s Sporting Goods Inc. reached a $2.4 billion deal to acquire Foot Locker Inc., combining two retailers saddled by President Donald Trump’s tariff wars.
Dick’s will pay $24 a share for Foot Locker, which implies an equity value of $2.4 billion and an enterprise value of $2.5 billion, the two companies said in a statement.
Shares in Foot Locker extended gains to surge as much as 83% in premarket trading on Thursday. Meanwhile, Dick’s Sporting fell as much as 13% in trading before the bell.
While both chains rely heavily on selling sneakers, a combination would bring together two companies with vastly different business models. Foot Locker is a 2,400-store chain made up of mostly smaller locations in cities around the world, whereas Dick’s is comprised of roughly 800 big-box stores in suburbs across the US.
Both companies have felt pressure from Trump’s trade war with the rest of the world, as many of the goods they sell from brands such as Nike and Adidas are made abroad in production hubs such as China and Vietnam.
Dick’s Chief Executive Officer Lauren Hobart has overseen efforts to improve the retailer’s e-commerce capabilities and also invest in its physical stores. The company’s sales growth has tapered off in the two most recent quarters.
Under Chief Executive Officer Mary Dillon, Foot Locker has been looking to boost sales by renovating a large portion of its store network while promoting its rewards program. The company has worked to mend its relationship with Nike, which had previously pulled back from wholesale partners in a bid to promote its own sales channels.
Dillon, who became CEO in 2022, had laid out an ambitious turnaround plans for Foot Locker, including reaching $9.5 billion in annual sales by 2026. Progress has been hard to come by as US shoppers have reined in on discretionary spending. For the year ended Feb. 1, Foot Locker’s revenue fell for the third year in a row, to less then $8 billion.
“If the purchase goes through, Dick’s would be inheriting a business that remains on the back foot,” said Neil Saunders, managing director at GlobalData. “The comeback is not yet fully in play.”
A takeover may attract regulatory scrutiny, given Dick’s dominance, he added, though there is no shortage of competition in the market with large brands such as Nike and other retail chains like JD Sports in growth mode.
Foot Locker also has an India connection courtesy of its partnerships with listed entities like Metro Brands and FSN E-commerce Ventures, parent company of the beauty and fashion e-tailer Nykaa.
During its December quarter earnings call, the Metro Brands management told analysts that they remain conservative in projections of new stores for Foot Locker, given the uncertainties of the BIS regulations. The management said that they have three more stores lined up for launch, having launched the first one in October last year and also having opened the largest Crocs store in Kochi.
Shares of Dick's Sporting Goods tumbled 10% in pre-market trading after the deal announcement.
(With Inputs From Hormaz Fatakia.)
