Dick’s Sporting Goods is acquiring Foot Locker for an equity value of about $2.4 billion.
Dick’s Sporting Goods has entered into a “definitive merger agreement” to acquire Foot Locker, for an equity value of about $2.4 billion and an enterprise value of about $2.5 billion.
Foot Locker has about 95 million shares outstanding, and its share price at the close of market yesterday, May 14, was $12.87. This yields a market cap of about $1.22 billion. As Dick’s reckons in its statement, the purchase represents a premium of about 66 percent to Foot Locker’s 60-day trading volume weighted average price. The deal is subject to the approval of Foot Locker’s shareholders and of regulators.
“We believe there is meaningful opportunity for growth ahead,” Dick’s Executive Chairman Ed Stack is quoted as saying in the statement. “By applying our operational expertise to this iconic business, we see a clear path to further unlocking growth and enhancing Foot Locker’s position in the industry.”
According to Foot Locker CEO Mary Dillon, quoted in the same statement, “by joining forces with Dick’s, Foot Locker will be even better positioned to expand sneaker culture, elevate the omnichannel experience for our customers and brand partners, and enhance our position in the industry.”
Footwear is one of three “key growth areas” enunciated in Dick’s latest annual report, along with e-commerce and a “repositioning” of the real estate and store portfolio.
Dick’s treats footwear as a store-within-a-store, alongside things like team sports, athletic apparel, outdoor and golf. And within each footwear store-within-a-store is a “House of Cleats,” dedicated to the team sports of association football, American football and baseball.
With respect to the business, footwear (athletic and casual combined) accounts for about a quarter of sales, and its share appears to be on the rise (24% in 2022, 26% in 2023, 28% in 2024). Footwear sales in fiscal 2024 amounted to $3.83 billion.
The two other major segments, hardlines and apparel, each account for about a third. The categories on the decline at Dick’s in 2024 related to outdoor (hunting, non-athletic apparel and equipment, fitness).
“Footwear is the product every athlete needs,” the Dick’s annual report continues, “and over the past decade, we have added premium footwear decks in approximately 90% of Dick’s locations.”
All of these locations – 856 in total, under various banners, at the end of fiscal 2024 – appear to be in the US. Dick’s has business interests, but no brick-and-mortar retail, in Canada and Hong Kong as well.
By contrast, Foot Locker had at the start of this past February some 2,634 stores split between North America, Europe and Asia-Pacific. More than half of them (1,665) are in North America, but the European network (608) is extensive.
The company’s latest financial report, for Q4 2024, speaks of 300 store refreshes in 2025 (to follow the 400 performed in 2024), with the opening of 20 stores and closing of 110. Net income for the year was $49 million.
Fifteen-year veteran Franklin R. Bracken was made President of Foot Locker on March 26, as we’ve reported, and has been working with CEO Dillon to implement the company’s Lace Up Plan to revamp the business. The company appears also to be proceeding with plans to move its headquarters from New York City to St. Petersburg, Florida, having signed a lease in March for about 111,000 square feet at the Carillon Business Park, according to Florida’s Business Observer.
