Dick’s chairman defends Foot Locker deal as long-term play
Dick’s Sporting Goods Inc. shares rose after its chairman pushed back on criticism of its pending acquisition of struggling footwear chain Foot Locker Inc.
Ed Stack, Dick’s executive chairman and son of the company’s founder, addressed investor concerns that the retailer plans to add a footwear business that will require work to turn around. Its shares were down about 17% since the transaction was announced on May 15.
“We understand that there’s really a group of people out there, shareholders, that would really have preferred we just continue to do what we’re doing,” Stack said on a conference call with investors and analysts. “We don’t think that’s right, long term, for the business.”
The $2.4 billion deal for Foot Locker unites two retailers with drastically different business models. Dick’s, which has about 800 big box sporting goods stores across the U.S., will add a 2,400-store chain largely made up of smaller mall-based shops in 20 countries.
Stack said the acquisition will strengthen the company’s brand relationships and that Foot Locker serves shoppers that Dick’s doesn’t reach. He assured investors that Dick’s operations won’t be interrupted and that executives will improve Foot Locker’s operations. The company expects to save as much as $125 million by cutting overlapping costs.
“What the Street needs to understand is that, like it or not, we don’t make investments or decisions for a quarter or two,” Stack said. “We make these decisions and investments for a lifetime.”
The retailer maintained its annual sales and profit forecast, a sign of strength ahead of the acquisition. Dick’s said earnings per share could be as high as $14.40 for the upcoming year. Comparable-store sales are expected to gain 1% to 3% in 2025. The outlook doesn’t include impact from its plan to buy Foot Locker.
Dick’s shares gained about 3% early Wednesday. The stock had been down 24% so far this year, through Tuesday’s close. The company had already posted preliminary results for the first quarter when it announced the Foot Locker acquisition.
Strong Sales
Lauren Hobart, Dick’s chief executive officer, has spent the last few years revamping the retailer’s store and upgrading e-commerce functions. The company has posted strong sales in recent quarters despite concerns about consumer spending, boosted by growth in its footwear business.
Dick’s said it will operate Foot Locker as a separate business unit and retain its branding. Executives cited Nike Inc.’s longtime relationship with Foot Locker as a reason for the deal, along with potential for international expansion.
Hobart said Nike is a vital strategic partner that’s performing well at Dick’s at the moment and that the sneaker brand has shared some of its product pipeline. She called out upcoming products across running, lifestyle and women’s basketball.
Both Dick’s and Foot Locker are trying to cope with cost pressures prompted by US President Donald Trump’s trade wars. Footwear brands are raising prices as they push added costs in production hubs targeted by Trump with elevated tariff rates, such as China and Vietnam, to consumers.