With the group’s $2.4 billion acquisition by Dick’s Sporting Goods slated to close in H2, Foot Locker has reported preliminary Q1 results.
Foot Locker is expected to report a $363 million loss in Q1, versus net income of $8 million in the year-ago period. On a non-GAAP basis, the Q1 loss is forecast at $6 million, compared with a year-ago profit of $21 million.
As for the pending acquisition, which will be recorded as a definitive merger, Dick’s will pay a premium of approximately 66 percent for Foot Locker shares, or $24 per unit, and operate the 2,400-door, global operation as a standalone business unit. The transaction will enable Dick’s to serve international customers for the first time, as it and Foot Locker strengthen their partnerships with key brand partners.
From a financial perspective, Dick’s expects the Foot Locker transaction to be accretive to its earnings in the first full fiscal year after the deal closes, excluding transaction and one-time costs. Mid-term cost synergies from the merger are estimated at $100 to $125 million from both procurement and direct sourcing efficiencies.
“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, Dick’s Executive Chairman Ed Stack said in a statement. “Together, we will leverage the complementary strengths of both organizations to better serve the broad and evolving needs of global sports retail consumers.”
Full financial results for the three months will be released on May 29.
