Agreed Foot Locker acquisition by DICK’s means newco will overtake JD as the largest global athleisure player Yesterday’s news that DICK’s Sporting Goods (NYSE:DKS, N/R) is acquiring Foot Locker (NYSE:FL, N/R) for $2.4bn means, that, once completed, JD Sports will no longer be the No.1 athleisure player globally (see Figure 1 overleaf). DICK’s has said that both companies will continue to be run separately and pursue their existing strategies, though $100m-£125m of synergies have been identified. Both businesses are complementary in offering different customer propositions and serving different markets in the US. Foot Locker also has an international operation. DICK’s management confirmed that it intends to keep the US focus of the DICK’s brand as it has a material growth opportunity to go after domestically. DICK’s has struck the deal at a time when Foot Locker’s share price has been trading at a c.15-year low, and logically is looking through the short-term geopolitical/macro concerns weighing on Foot Locker’s share price. DICK’S is coming from a position of strength with good business momentum and a strong balance sheet. Foot Locker is an iconic brand and an early-stage recovery story, in our view. Recovery momentum is starting to build and a lot of the difficult restructuring (e.g. store closures) has already happened, which de-risks the deal to a degree. Also, with Foot Locker more exposed to NIKE by sales participation, it has been disproportionately impacted by NIKE’s issues of late. However, with NIKE’s recent refocus back on wholesale under new CEO, Elliot Hill, this is positive for Foot Locker and all wholesale partners. US market may become more rational over the longer term From JD Sports’ perspective, short term, the newco will be a far more formidable US competitor and also, given its larger combined scale, in a stronger position with global brands at the negotiating table. The newco, in our view, will be a more focused business around two scaled brands whereas JD Sports’ US business comprises five brands. However, longer term, the ongoing consolidation of the US athleisure market could well end up being a positive as it may become a more rational market in the long term with less promotional activity. This would ultimately be positive for all. JD’s next news: FY25 results on 21st May. This is expected to be a non-event as JD held a comprehensive update on the Group’s strategic progress just over a month ago (9th April). It is difficult to see JD Sports’ profits recovering in the near term. The industry backdrop remains challenging not only from a macro perspective, but NIKE’s reset plans are likely to weigh on JD’s performance over the remainder of FY26 at least. Also, President Trump’s proposed tariffs may not help NIKE’s reset from a US perspective either. JD’s valuation (CY26E PE c.7x) still implies a credibility issue, but we believe investors are overlooking the strength of JD’s global market position and its attractive long-term growth opportunities.