Dick’s Sporting Goods is buying rival Foot Locker in a $2.4 billion deal, marking another major deal that tariff-prone apparel companies are making to future-proof themselves.
In an announcement Thursday, Dick’s said the transaction will help the Pittsburgh-based sporting goods store internationally for the first time. It will maintain the Foot Locker name and run the shoe stores as a standalone business, and it expects to operate its 2,400 stores that span 22 countries.
But the deal comes with some significant risk for Dick’s. President Donald Trump’s tariffs threaten the footwear industry as a whole, but Foot Locker, in particular, has been under pressure from the steady decline in America’s shopping malls. In 2023, the company operated about 3,000 stores, but began closing hundreds of locations.
Foot Locker over the past two years relaunched its retail brand to attract younger, more diverse consumers — but the reboot hasn’t proven successful. In March, the company said its total fourth-quarter sales were down 5.8% year-over-year amid a downturn in Nike shoe sales (Foot Locker is Nike’s largest retail partner).
Dick’s investors weren’t pleased with the deal Thursday. Shares of Dick’s (DKS) dropped 13% in premarket trading. But the company said it believes in the brand.
“We believe there is meaningful opportunity for growth ahead,” said Ed Stack, executive chairman for Dick’s. “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”
Foot Locker’s (FL) stock soared 80% in premarket trading following the news. Thursday’s transaction marks a 66% premium of Foot Locker’s stock, which has slumped more than 40% over the past year.
Looming in the backdrop of the deal are Trump’s tumultuous tariff policies. Roughly 99% of shoes and sneakers sold in the US are imported, mostly from China and Vietnam, according to the Footwear Distributors and Retailers of America. As such, those tariffs threaten to disrupt global supply chains and drive up the price of footwear.
Dick’s is one of the largest sporting goods retailers by market share in the US, with more than 700 stores nationwide. A tie-up with Foot Locker could help the chain expand its retail footprint, Neil Saunders, managing director of GlobalData, said.
“While there is some overlap between the locations, the nature of the stores is different, and Foot Locker would give Dick’s access to a wider selection of malls and customers,” Saunders said.
However, given Dick’s dominance in the sporting goods market, the takeover could draw regulatory scrutiny, he added.
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