Dick’s Sporting Goods has reached a deal to acquire rival Footlocker for $2.4 billion, marking a significant move in the footwear market and following the Skechers acquisition.
The proposed buyout, valuing Footlocker shares at $24 each, reflects an 86% premium based on their last closing price. This acquisition would enhance Dick’s presence in the sneaker market, expanding its store count to over 3,200 and opening doors to international markets.
Additionally, the combined entity could leverage stronger negotiations with major brands like Nike, Adidas, and Puma, especially with the uncertainty posed by potential tariffs that could influence supply chain costs for U.S. retailers and affect consumer spending.
“Even with tariffs possibly coming into play, this seems like a strategic moment for growth and to increase buying power in the footwear sector,” remarked Joel Brock, a partner at a global business consulting firm.
On the news of the acquisition, Footlocker stocks surged by 85% to reach $23.78, recovering from a significant annual drop of about 40%. However, shares of Dick’s Sporting Goods fell by 14%.
Some analysts, like TD Cowen’s John Kernan, criticized the move, suggesting it could be a “strategic mistake” since it may require more investments to revitalize Footlocker.
In recent years, Footlocker has been losing market share, notably competing against brands such as Nike and Under Armour, which have strengthened their direct-to-consumer sales and drawn more customers back into shopping malls, where most Footlocker locations are found.
Dick’s chairman, Ed Stack, noted in a recent analyst call that many of Footlocker’s challenges stemmed from their relationship with Nike, especially given Nike’s shift to direct sales under former CEO John Donahoe.
Interestingly, Nike appears to be changing its stance once again under new CEO Elliot Hill, moving back towards collaboration with retailers.
In a statement, Dick’s revealed plans to run Footlocker as a separate entity within its structure while aiming to keep the Footlocker brand intact.
Footlocker, with operations in 20 countries across North America, Europe, and Asia, reported global sales of $8 billion in 2024.
Meanwhile, Skechers made headlines last week, agreeing to a $9.422 billion acquisition by a private equity firm after 26 years on the open market, responding to the challenges posed by U.S. tariffs.
Dick’s plans to finance this acquisition using a mix of available cash and new debt, with expectations for completion in the latter half of 2025.
