Dick’s sporting goods buys struggling shoe chain foot lockers for around $2.4 billion.
Dick said Thursday that he hopes to operate foot lockers as a standalone unit and maintain foot locker brands such as children’s foot lockers, Champion Sports, WSS and Japanese sneaker brand Atmos.
“Sports and sports culture remains extremely strong and with this acquisition we will create a new global platform that will deliver evolving needs through product mixes that know the love that consumers know, know, enhance store design and omni-channel experiences and appeal to a wide range of customer bases.
Foot Locker partially announced a turnaround plan in 2023 to improve relationships with major brands. Speaking at the JPMorgan Retail Summary Meeting last month, Footlocker CEO Mary Dillon said the company is working closely in Nike, particularly in categories such as basketball, sneaker culture and children.
Earlier this month, Skechers announced that it has been made private by investment companies by 3G Capital in more than $9 billion in transactions.
The retail industry is increasingly concerned about the trade war with President Donald Trump’s other countries, particularly China. Athletic shoemakers have invested heavily in production in Asia.
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Stocks of sports goods and athletic shoe companies are under pressure all year round. Footlocker stocks plummeted 41% this year. It also faces pressure elsewhere, with major athletic companies like Nike and Adidas shifting their sales strategies.
Skehees had fallen almost 8% this year.
According to the American Apparel & Shoe Association, around 97% of clothing and shoes purchased in the US are imported primarily from Asia. Using overseas factories reduces labor costs for US companies, but neither they nor the overseas suppliers are likely to absorb the price rise due to the new tariffs.
The New York City-based footlocker offers Dick’s potential, a huge real estate footprint, and provides the Pittsburgh company with its first foothold overseas.
Footlocker has around 2,400 retailers in 20 countries, including North America, Europe, Asia, Australia and New Zealand. There are also stores approved in Europe, the Middle East and Asia. The company had global revenue of $8 billion last year.
Jefferies analyst Jonathan Matuszewski said about 33% of footlocker sales come from outside the US. He expects the total company to generate around 12% of its sales internationally on a pro-forma basis.
The deal also broadens Dick’s customer base, with sneaker collectors worried and anticipating a new drop from footlockers.
GlobalData Managing Director Neil Saunders said in an emailed statement that Foot Locker, which has a 4.3% share of the sports goods market, will soon be boosting Dick’s.
“It will also give dick a significant bargaining power with the country’s brands, especially in the sneaker space,” he added.
Footlocker shareholders may choose to receive either $24 in cash or 0.1168 shares of Dick’s common stock for each Footlocker share they own.
Dick said he hopes to close the footlocker deal later this year. Transactions require approval from Footlocker shareholders.
Dick’s stock fell more than 10% before the market opened, while Footlocker’s stock spiked over 82%.
