Dick’s Sporting Goods is nearing a deal to acquire Inc. for roughly $2.3 billion, according to a Wall Street Journal report.
The deal would dramatically alter the athletic footwear landscape — giving Dick’s major international presence and huge leverage with big brands like Nike and Adidas.
Shares of Foot Locker shot up 65 percent to $21.26 in after-market trading, while Dick’s Sporting Goods stock fell 5.1 percent to $198.99. It is not uncommon for a company about to make a big purchase to see its stock fall on the news given the integration risks involved.
According to the WSJ report, a deal could be finalized as soon as Thursday, with Dick’s aiming to buy Foot Locker at $24 per share. That would be a nearly 90 percent premium to Foot Locker’s current price, which closed at $12.87 on Wednesday.
Neil Saunders, managing director of GlobalData, called Dick’s reported bid “a bold move to consolidate the chain’s power in the sporting goods arena and to provide it with a steeper growth trajectory.”
“That said, if the purchase goes through, Dick’s would be inheriting a business that remains on the back foot,” Saunders said. “While Foot Locker has made some strides in improving its stores and operations, its market share has fallen by 1.8 percentage points since 2019 and the comeback is not yet fully in play. However, this might be to Dick’s advantage as it could engineer a recovery with its extensive retail skills and add significant value over the price it has offered.”
FN, WWD’s sibling publication, has reached out to both Foot Locker and Dick’s Sporting Goods for comment.
In March, Foot Locker delivered fourth-quarter results above its previously revised expectations, as the company noted that investments and execution drove positive comparable sales and “meaningful” gross margin improvement compared to the prior year.
Total sales in the fourth quarter of 2024 were $2.24 billion, down 5.8 percent from $2.38 billion the same period in 2023.
For the full fiscal year of 2024, Foot Locker said total revenue was $7.99 billion, down from $8.17 billion in fiscal 2023. Net income from continuing operations in the year was $18 million, up from a $330 million loss last year.
Foot Locker promoted Franklin Bracken to the role of president to help accelerate the execution of its Lace Up Plan, the strategic plan laid out in 2023 to elevate the omni-retail experience, enhance productivity and create long-term shareholder value.
If Dick’s and Foot Locker do cut a deal, it would come quickly on the heels of Skechers $9 billion go-private agreement with Brazilian private equity firm 3G Capital. The monumental deal is considered to be the biggest shoe buyout in history.
The deal activity comes at a time when the footwear industry, which is heavily exposed to China and other Asian production hubs, is under intense pressure.