The big bets of Dick’s Sports Goods (DKS) Football Lockers (FL) can have a lot of pitfalls.
The company announced Thursday a clear agreement to buy the sneaker chain at $24 per share, or $2.4 billion, a considerable premium, while Foot Locker closed at $12.87.
"With the growing trends of macro trends, such as sports and culture... we believe that the long-term industry tailwinds are still strong and this expanded platform can be well positioned for long-term growth," CEO Lauren Hobart told investors on the phone.
While some say this could attract new customers, Dick strengthened partnerships with major brands like Nike (NKE) and offered an international business to the company, while others on Wall Street weren't as big-eyed.
“The proposed deal will mean getting a structural challenge for a mall-based retailer with 2,410 small stores worldwide…a huge dependence on a brand (Nike)…in 2024 operating margins will be weak, and in 2024 it will be Dick’s 11.0% dilution in 2024,” wrote Joe joe Feld Man of Telsey Advisory Group Group Group Group Group.
Foot Locker's same-store sales fell 2.6% on initial results in the first quarter, while Dick's growth rate was 4.5%. It has struggled with sales growth in recent years and has partially transformed in building a new relationship with Nike. About 60% of the enough lockers to buy comes from Nike.
Foot Locker shares soared more than 80% on Thursday, while Dick's sporting goods sink 14% as investors advertise financial risks.
Felman added: “The industry is dealing with a continuous shift in direct to consumer distribution, and Foot Locker has been experiencing soft demand since 2018, except for the 2021 Covid year… Dick's can already be strongly represented through its current form and strategic plan.”
Retailers have been struggling with consumer sentiment in 2025 and Trump’s tariff war with major manufacturing countries such as China and Vietnam. Foot Locker's stock fell more than 40% ahead of the announcement.
Read more: What Trump’s tariffs mean to the economy and your wallet
Lower valuations may attract buyers. The acquisition follows recent retail deals, such as Skechers (SKX) acquisition for 3G Capital (SKX), Versace sold from Capri Holdings (CPRI) to Prada (1913.HK), and Nordstrom’s (JWN) to create a family’s hedonistic contract.
But, UBS analyst Michael Lasser said in a note: “Retail integration is often challenging.” He pointed to examples such as “home dollar and dollar trees, general parts and Advance Auto, Albertson and Safeway, and even Sears and Kmart.”
"In short, it's hard to put together different systems, cultures, models, infrastructure and teams," Lasser added. A recent example was Home Depot's purchase of SRS to enhance its career business.
Dick's executive team is especially on Nike's turnaround.
“Football lockers are an important part of Nike’s long-term strategy,” said Dick’s sports cargo chair Ed Stack. “We are pleased to have enough lockers to take advantage of all these things with us.” He noted that Dick’s 2007 acquisition of the Golf League strengthened its relationship with the golf brand.
Jefferies analyst Randal Konik said on Foot Locker, a “better run” could be “a net gain for Nike, strengthening its issuance strategy and cementing its position in sports retail.” With Nike’s promotions getting fewer and fewer, the space for profit is about to expand.
Stifel analysts include Adidas (ads.de), Onon (Onon) and Deckers (Deck) Hoka, just as other brand relationships Dick's inherited.
Although Dick's separates its store from football lockers, the purchase will also introduce other chains under its banners, such as children's foot lockers and Champs Sports.
Stack seems ready to face the challenge.
"We're very conservative," he told investors. "If we didn't see this clear vision, or if we think it would affect our ability at Dick, we wouldn't do it. We know we're going to prove it now."
He added: "We know there will be some skepticism, but we want the job."
Brooke Dipalma is a senior journalist at Yahoo Finance. Follow her on @Brookedipalma Or email her at bdipalma@yahoofinance.com.
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