Dick’s Sporting Goods Acquires Foot Locker in $2.4 Billion Deal
Dick’s Sporting Goods is buying the struggling footwear chain Foot Locker for about $2.4 billion, the second buyout of a major footwear company in as many weeks. This acquisition is expected to create a new global platform that serves the ever-evolving needs of sports and sports culture enthusiasts.
Dick’s said Thursday that it expects to run Foot Locker as a standalone unit and keep the Foot Locker brands, which include Kids Foot Locker, Champs Sports, WSS, and Japanese sneaker brand atmos. The company aims to leverage Foot Locker’s iconic concepts, enhanced store designs, and omnichannel experiences to appeal to its diverse customer base.
Leadership and Vision
Both companies are led by women, with Lauren Hobart as the CEO of Dick’s Sporting Goods since 2021 and Mary Dillon as the CEO of Foot Locker since 2022. Hobart stated that “sports and sports culture continue to be incredibly powerful, and with this acquisition, we’ll create a new global platform that serves those ever-evolving needs through iconic concepts consumers know and love, enhanced store designs and omnichannel experiences, as well as a product mix that appeals to our different customer bases.”
Industry Context
Foot Locker announced a turnaround plan in 2023 to improve its relationship with big brands. The company has been working closely with Nike, specifically in categories including basketball, sneaker culture, and kids. Earlier this month, Skechers announced that it was being taken private by the investment firm 3G Capital in a transaction worth more than $9 billion.
The retail industry has been growing increasingly concerned over President Donald Trump’s trade war with other countries, particularly China. Athletic shoe makers have invested heavily in production in Asia, and about 97% of the clothes and shoes purchased in the U.S. are imported, predominantly from Asia.
Financial Implications
Shares of sporting goods and athletic shoe companies have been under pressure all year. Foot Locker’s stock has plunged 41% this year, while Skechers had fallen almost 8% this year. The acquisition is expected to give Dick’s substantially more bargaining power with national brands, especially in the sneaker space.
Foot Locker shareholders can choose to receive either $24 in cash or 0.1168 shares of Dick’s common stock for each Foot Locker share that they own. Dick’s said that it anticipates closing on the Foot Locker deal in the second half of the year, subject to approval from Foot Locker shareholders.
Market Impact
Foot Locker has about 2,400 retail stores across 20 countries in North America, Europe, Asia, Australia, and New Zealand. The company had global sales of $8 billion last year, with about 33% of its sales coming from outside the United States. The combined company is expected to generate approximately 12% of sales internationally on a pro forma basis.
The deal also broadens Dick’s customer base, with sneaker collectors anxiously anticipating new drops from Foot Locker. Neil Saunders, managing director of GlobalData, stated that Foot Locker would give an immediate boost to Dick’s, and the acquisition would provide Dick’s with a significant presence in the global market.
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Conclusion
In conclusion, the acquisition of Foot Locker by Dick’s Sporting Goods is a strategic move that aims to create a new global platform for sports and sports culture enthusiasts. The deal is expected to provide Dick’s with a significant presence in the global market, broaden its customer base, and give it more bargaining power with national brands. As the retail industry continues to evolve, it will be interesting to see how this acquisition plays out and what implications it may have for the future of sports retail.
Frequently Asked Questions
Q: How much did Dick’s Sporting Goods pay for Foot Locker?
A: Dick’s Sporting Goods paid approximately $2.4 billion for Foot Locker.
Q: What brands will Dick’s Sporting Goods retain after the acquisition?
A: Dick’s Sporting Goods will retain the Foot Locker brands, including Kids Foot Locker, Champs Sports, WSS, and Japanese sneaker brand atmos.
Q: What is the expected outcome of the acquisition for Dick’s Sporting Goods?
A: The acquisition is expected to give Dick’s Sporting Goods a significant presence in the global market, broaden its customer base, and provide it with more bargaining power with national brands.
Q: When is the acquisition expected to be completed?
A: The acquisition is expected to be completed in the second half of the year, subject to approval from Foot Locker shareholders.
