Dick's Foot Locker Move Draws Skepticism As Analysts Question Game Plan

Telsey Advisory analyst Joseph Feldman trimmed the price forecast for Dick’s Sporting Goods Inc. DKS from $250 to $220 while keeping an Outperform rating.

On Thursday, the company disclosed a definitive deal to acquire Foot Locker, Inc. FL for an equity value of around $2.4 billion and an enterprise value of about $2.5 billion.

The analyst notes that despite pre-announced better-than-expected first-quarter 2025 earnings, DICK’S Sporting Goods (DKS) shares declined by approximately 15% on Thursday.

Feldman anticipates continued near-term pressure on the company’s shares as investors evaluate the deal’s rationale, execution risks, and capital allocation priorities.

Investors appear skeptical of the acquisition’s logic for Dick’s, considering its already strong and successful position within the US sporting goods market and its effective strategic growth initiatives, adds the analyst.

The analyst notes that Foot Locker is a structurally challenged, mall-based retailer which is significantly reliant on a single brand (around 60% of purchases are from Nike) and has a weak 2024 operating margin of 2.5%.

Nevertheless, Feldman believes Dick’s acquisition of Foot Locker can unlock value, creating a more dominant sporting goods retailer.

While near-term sales and earnings growth might be lower post-acquisition, overall performance can still be strong, adds the analyst.

The analyst expects Dick’s to continue driving profitable share gains long-term through its brand assortment, private labels, store concepts, and e-commerce.

Price Action: DKS shares are up 2.95% at $184.33 at the last check on Friday.

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