Nike’s renewed focus on wholesale under CEO Elliott Hill is why Dick’s Sporting Goods is betting on Foot Locker in an acquisition valued at $2.5 billion, said Dick’s Executive Chairman Edward Stack.
“Nike moved into DTC and away from wholesale partners a while back, and it hurt Foot Locker pretty significantly,” Stack explained on a conference call about the deal with analysts on Thursday morning. Dick’s, on the other hand, has maintained a special relationship with Nike as a preferred wholesale account, and even linked loyalty programs in 2021.
Dick’s has outperformed its competitors during and after the pandemic, and sales increased 4.5% in Dick’s preliminary first-quarter results, also shared Thursday.
“Nike’s changed their position, and is really leaning back into wholesale,” Stack said. “I think Elliot and his team are doing a great job, and we’re pretty excited about what’s going on with Nike.”
Foot Locker’s 2,400 stores are poised to benefit from that shift, he said.
“We think the timing of this is perfect.”
The transaction, which is expected to close in the second half of 2025, values Foot Locker at approximately $2.5 billion. Foot Locker shareholders can receive either $24 per share in cash or 0.1168 shares of Dick’s common stock for each share they hold.
Matt Powell, a senior advisor at BCE Consulting, said he wasn’t surprised that Dick’s made a move in the marketplace. But he was surprised Dick’s chose Foot Locker, which has struggled in recent years, but is showing improvement.
“Dick’s will bring some operational discipline to Foot Locker,” Powell said. “Not that Foot Locker was a bad operator, but Dick’s is a superb operator.”
The deal will also give Dick’s significant leverage now against its footwear brands, he said.
“They will be the largest athletic shoe retailer in the world when this deal is done, and I think that gives them much more leverage against the brands for better pricing and better deals,” Powell said.
Tariffs and Timing
That leverage may also help manage tariffs in the short term, he said.
Kate McShane, a managing director at Goldman Sachs, questioned the timing of the deal on the call because of ongoing uncertainty related to tariffs and trade policy and its impact on footwear.
“Tariffs are something we think about all the time, and they change from time to time,” Stack said, citing the recent tariff reductions on products from China. For now, Dick’s is working with its brands and supply chain partners to manage them.
“We think this is the right time to do this acquisition,” Stack said. “We’ve been thinking about this for a very long time, and all the pieces fell together right now, and we couldn’t be happier.”
It’s also a sign that Dick’s, which prides itself on its ability to forecast, doesn’t believe tariffs will last long-term, Powell said.
“My gut is that Dick’s is looking at this and saying, ‘We think the tariff thing is going to be a short-lived issue,’” Powell said. “’We don’t think it’s going to be around forever, and when things return to sanity, we’ll be able to leverage that.’”
Dick’s Goes Global
The deal will mean Dick’s will have an international presence for the first time, although it plans to operate Foot Locker as a standalone business unit and maintain the Foot Locker brands, which include Kids Foot Locker, Champs Sports, WSS, and Atmos. Foot Locker’s store footprint encompasses 20 countries in North America, Europe, Asia, Australia, and New Zealand as well as a licensed store presence in Europe, the Middle East, and Asia.
“By joining forces with Dick’s, Foot Locker will be even better positioned to expand sneaker culture, elevate the omnichannel experience for our customers and brand partners, and enhance our position in the industry,” said Mary Dillon, CEO of Foot Locker in a statement. “We are pleased to provide shareholders with a transaction structure that offers the choice of significant and immediate cash value or the opportunity to invest in the combined company and benefit from the substantial upside potential.”
Multiple Store Formats for Diverse Customer Groups
The newly combined company is aiming to serve broader groups of customers, from performance-focused athletes to sneakerheads, with differentiated retail concepts that build on learnings from Dick’s House of Sport and Foot Locker’s Reimagined Concept stores. Additional goals include strengthening relationships with brand partners via the company’s newly global reach, offering multiple platforms for both established and emerging partners to showcase their assortments, connect with athletes, and increase their visibility.
That strategy makes sense, Powell said, because Dick’s and Foot Locker serve different customers. Footwear is between 25% and 30% of Dick’s business, he estimated, and it has a large equipment and apparel business as well.
Dick’s is more family-oriented, while Foot Locker serves younger customers from more diverse ethnic backgrounds, he said. Dick’s isn’t as fashion-oriented as Foot Locker, and their footwear assortments differ widely, he said.
”There are some really big differences between the two businesses, and I think that’s why they’ll operate them separately,” Powell said.
The acquisition is expected to unlock operational efficiencies that will deliver $100 to $125 million in savings in the medium term, achieved through procurement and direct sourcing efficiencies.
“We have long admired the cultural significance and brand equity that Foot Locker and its dedicated Stripers have built within the communities they serve,” Stack said in a statement. “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.”
For its 2024 fiscal year, which ended Feb. 1, 2025, Foot Locker had $7.9 billion in net sales, down from the $8.1 billion generated in FY 2023. Dick’s net sales for its FY 2024, which also ended on Feb. 1, were $13.4 billion, up from $12.9 billion the previous fiscal year.
Adam Blair of sister publication Retail TouchPoints contributed to this story. Kate Robertson can be reached at kate@shop-eat-surf-outdoor.com.
