Wall Street Analysts See Nike as a Winner in Dick's-Foot Locker Deal
Key Takeaways
- Nike is expected to benefit from Dick’s Sporting Goods acquiring Foot Locker, a deal announced Thursday morning.
- After the deal, Nike is expected to represent about 30% to 35% of Dick’s and Foot Locker’s combined sales.
- Nike is progressing with its plans to introduce new products as part of its turnaround.
Wall Street analysts see Nike (NKE) as a key beneficiary from Dick’s Sporting Goods (DKS) acquiring Foot Locker (FL) in a deal valued at around $2.4 billion.
“A better-run FL, combined with a cleaner marketplace and resonant innovation, should support NKE’s recovery,” Jefferies analysts wrote in a note before the expected deal was confirmed. “With shares still below COVID lows, we’d be buyers at current levels.”
The analysts said that Foot Locker being owned by a “highly capable and efficient operator” like Dick’s could improve Foot Locker’s operations. It could also help Nike’s “already robust relationship” with Dick’s, and “enhance NKE’s retail presence and brand consistency.”
UBS Expects Nike To Account for 30% to 35% of Sales
Nike represents at least half of Foot Locker’s sales and is the largest contributor to Dick’s footwear sales, per the Jefferies analysts. Analysts from UBS estimated that Nike could be roughly 30% to 35% of Dick’s total sales after the deal is complete, noting that “in some ways, this deal increasingly ties together the fortunes of these businesses.”
Oppenheimer analysts said they expect a combined Dick’s Sporting Goods and Foot Locker to “represent an even stronger distribution partner” for Nike and other leading brands like Under Armour (UAA), positioning the retailers to take advantage of innovation from the brands.
Nike is in the midst of a turnaround after a difficult 2024 that saw the athletic apparel giant replace its CEO, with analysts warning after recent quarters that the effort will take time. Analysts previously said Foot Locker’s March earnings report showed some evidence that Nike’s plan was working, with new designs resonating with customers.
Nike shares were up close to 2% in recent trading, while Dick’s shares fell 15% and Foot Locker surged 85%.