Dick's Sporting Goods has announced a significant move in the sporting goods industry by agreeing to purchase smaller rival Foot Locker for an impressive $2.4 billion. This acquisition marks the second major footwear deal this month, following the recent buyout of Skechers, as U.S. retailers strive to navigate a challenging demand landscape.
The acquisition deal involves Dick's offering $24 per share for Foot Locker, which represents an astonishing 86% premium over the stock's last closing price. Following this announcement, shares of Foot Locker soared by 82% in premarket trading, reaching $23.45, despite experiencing a 40% decline in value this year. In contrast, shares of Dick's Sporting Goods saw an 8% drop.
This acquisition is Dick's largest in the sporting goods sector and is seen as a strategic move to enhance its presence in shopping malls while also venturing into international markets for the very first time. This expansion is crucial as retailers face a slowdown in consumer spending across the U.S.
Recently, several U.S. retailers have issued gloomy forecasts as the Trump administration's hefty tariffs have forced consumers to tighten their spending. Many are bracing for potential price increases on everyday items, including household staples, toys, and apparel. Foot Locker, in particular, has struggled in recent years, losing market share to competitors such as Nike and Under Armour, both of which have successfully expanded their direct-to-consumer businesses. Additionally, Foot Locker has faced challenges due to declining customer visits to indoor malls, where many of its stores are located.
Foot Locker operates approximately 2,400 retail stores across 20 countries, including major markets in North America, Europe, and Asia. Last year, the company reported worldwide sales totaling $8 billion. Following the acquisition, Dick's plans to maintain Foot Locker as a standalone business unit within its corporate structure, preserving the Foot Locker brands.
Last week, another significant development occurred when Skechers agreed to a $9.42 billion buyout by private equity firm 3G, marking its exit from public markets after 26 years. This move reflects the ongoing challenges that popular shoe brands face, particularly in light of the steep U.S. tariffs impacting their operations.
Dick's intends to finance the acquisition of Foot Locker using a combination of cash-on-hand and new debt. The deal is expected to close in the second half of 2025, signaling a transformative time for both companies as they adapt to the evolving retail landscape.
