Dick’s Sporting Goods takes over Foot Locker in $2.4B deal

Dick’s Sporting Goods has officially bought Foot Locker for $2.4 billion.

Already one of the largest sporting goods retailers in the U.S., the Findlay-based company has gone global by adding about 2,400 Foot Locker locations in 20 countries.

The deal was unveiled in May and finalized Monday.

Foot Locker and its portfolio of brands, including Kids Foot Locker, Champs Sports, WSS and atmos, will operate separately under new leadership.

Dick’s Executive Chairman Ed Stack will lead the global Foot Locker businesses. Former Nike executive Ann Freeman was named president of Foot Locker North America.

“We are very enthusiastic about the future of Foot Locker,” Stack said in a statement. “The world-class team we have assembled is committed to returning Foot Locker to its rightful place in our industry.”

Foot Locker has wobbled in recent years, losing $341 million in 2022, then almost entirely erasing that loss in 2023. Last year, it turned a $12 million profit.

In a March earnings call, then-Chief Commercial Officer Frank Bracken said Foot Locker’s shoe sales were improving, but its apparel business was struggling.

Dick’s, on the other hand, has posted profits upward of $1 billion each of the last three fiscal years, in part by leaning into its expansive House of Sport concept.

Some investors have questioned why the company would add a struggling brand like Foot Locker to its portfolio. Shares tumbled 15% when the news broke in May.

They’ve stayed steady this week.

Around 86% of Foot Locker shareholders elected to convert their holdings to Dick’s stock. The rest were paid out in cash for a total of $223 million.

Greg Zakowicz, an e-commerce adviser at marketing software company Omnisend, said the move doesn’t make a ton of sense for Dick’s when looking only at the U.S.

“I think what they’re doing is they’re buying their international presence,” Zakowicz said. “It allows them to expand into that overseas market without having to make the massive investment to do so.”

Dick’s is making a bet on Nike as much as it is Foot Locker, in the view of Matt Powell, a footwear and retail expert who runs consulting firm Spurwink River.

Nike makes up about 60% of Foot Locker’s sales, so when the brand succeeds, so do the stores.

Recent stumbles by Nike — from investing too much into direct-to-consumer sales to stagnant product lines — are part of why Foot Locker announced plans in 2023 to close 400 stores by 2026.

“I think Nike is doing all the right things they need to do to turn the business around,” Powell said. “When Nike gets well … there is not a retailer in the world that benefits more than Foot Locker.”

U.S. Sen. Elizabeth Warren, D-Mass., has raised antitrust concerns about the deal. In an August letter, she urged the Federal Trade Commission and the Department of Justice to investigate whether consumers would be harmed.

“The combination of Dick’s Sporting Goods and Foot Locker would decrease competition in the retail athletic footwear markets, cut jobs, raise prices, and leave Americans to foot the bill,” Warren said.

Dick’s also owns Golf Galaxy, Public Lands and Going Going Gone! as well as youth sports app GameChanger. By adding Foot Locker, its store count has swelled to more than 3,200.

The deal earned antitrust clearance without what’s known as a second request for information from the Federal Trade Commission, suggesting the deal was never in real danger of being struck down.