By Denny Jacob

Dick's Sporting Goods issued preliminary first-quarter results ahead of Wall Street's estimates, boosting its outlook amid a major corporate change.

The sporting-goods retailer said it will acquire Foot Locker in a deal worth $2.4 billion after the two sides reached an agreement, confirming a report about the deal first made by The Wall Street Journal.

Shares of Dick's declined 7.9% to $193 in premarket trading, while Foot Locker rocketed 83% to $23.60.

Dick's said preliminary first-quarter results showed comparable sales growth of 4.5% and adjusted earnings of $3.37 a share. Analysts polled by FactSet expected comparable sales growth of 2.6% and $3.20 a share in adjusted earnings.

Foot Locker, meanwhile, said preliminary first-quarter results are expected to result in comparable sales declining by 2.6% from the prior-year period, while losses are forecast at seven cents a share on an adjusted basis. Analysts polled by FactSet expected comparable sales to grow 0.7% and losses to come in at 3 cents a share on an adjusted basis.

The sneaker and athletic-wear retailer added that it will not be providing or updating previously issued guidance.

Dick's said it intends to finance the acquisition through a combination of cash on hand and new debt. The company noted the transaction is expected to be accretive to its earnings per-share in the first full year post close, excluding one-time costs, and deliver between $100 million and $125 million in cost synergies in the medium-term.

Foot Locker shareholders will elect to receive either $24 in cash or 0.1168 shares of Dick's common stock for each share of Foot Locker common stock. The $24 a share consideration represents a premium of about 66% to Foot Locker's 60-day trading day volume weighted average price.

The deal expands Dick's addressable market opportunity, particularly by providing it a way to reach international audiences for the first time. The company said it expects to operate Foot Locker as a standalone business unit within its portfolio and maintain the Foot Locker brands, which includes the namesake brand, Kids Foot Locker and Champ Sports, among others.

The deal, unanimously approved by boards of both companies, is expected to close in the second half of 2025.

The deal comes after retailers and sneaker companies were expected to face great pressure from President Trump's tariff plans last month, though most have been paused. It also follows the recent sneaker buyout of Skechers, which agreed to sell itself earlier this month for $9.4 billion to 3G Capital, a private-equity firm.

Write to Denny Jacob at denny.jacob@wsj.com

(END) Dow Jones Newswires

May 15, 2025 07:23 ET (11:23 GMT)

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