Shares in retailer Dick’s Sporting Goods (DKS) jumped higher today after it said it had completed its $2.4 billion acquisition of rival Foot Locker.
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Rightful Place
Dick’s, which first announced the deal back in May, said it would now have a stronger foothold in the sneaker market with over 3,200 stores, plus e-commerce and digital businesses across 20 countries in North America, Europe, Asia and Australia.
Dick’s will continue to operate Foot Locker as a standalone business keeping brands including Foot Locker and Champs Sports. The deal is expected to result in between $100 million and $125 million in cost savings. It is also set to add to Dick’s earnings per share in fiscal 2026, excluding transaction-related and other one-time costs.
“We are committed to returning Foot Locker to its rightful place in our industry,” said Ed Stack, executive chairman of Dick’s.
Good Shape
The DKS share price initially suffered after the announcement in May, but has bounced back since – see below:
That dip was mostly down to wariness over the health of the Foot Locker business. It has struggled since the Covid-19 pandemic shut down its stores or forced them to operate at reduced capacity. Prior to news of the acquisition, FL stock had lost about 40% of its value this year and was down nearly 50% over the past five years.
Analysts have warned that running an athletic specialty retailer that focuses on fashion lifestyle consumers, and operates smaller stores, many of which are in malls or in urban street locations, is not within the “core competencies” of Dick’s Sporting Goods.
However, Dick’s seems to be in fine form as it seals the deal. It recently posted a 5% increase in comparable store sales in Q2, and a consolidated sales increase of 5% to $3.65 billion. It also raised its full-year outlook, now expecting comp sales growth of 2% to 3.5% and EPS between $13.90 and $14.50.
It is being boosted by an increase in the health and wellness markets around the world.
Is DKS a Good Stock to Buy Now?
On TipRanks, DKS has a Moderate Buy consensus based on 9 Buy and 9 Hold ratings. Its highest price target is $275. DKS stock’s consensus price target is $239, implying a 6.13% upside.
