Dick's Acquires Footlocker: What Does It Mean For The Outdoor Industry?

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Today on The Rock Fight we dig into last week's news that Dick's Sporting Goods has acquired Foot Locker. Colin is joined by Producer Dave and Outdoor Industry Insider Eoin Comerford to discuss and answer the following questions:

• How does this acquisition play into Dick's long term strategy? (06:45)

• How has the market reacted to the acquisition? (19:25)

• What will be the fallout to footwear brands? (23:28)

• How will this acquisiton impact the broader outdoor industry? (28:07)

Lastly Colin wraps up the show with The Parting Shot with a tip for any of our older listeners!

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Episode Transcript:

Colin True

00:00:01.040 - 00:02:09.280

Today's episode of the Rock Fight is presented by Oboz, who wants to share their love of hiking. And we want to help them by uncovering all the different ways we love to take the long walk, including the following reasons.

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And if you're near my old hometown of Dover, New Hampshire, you can get your oboes at legendary Reds Shoe Barn. You can't stop by Biddy Mulligan's, you can't stop by Kelly's Row or the Barley Pub. They're all gone. But Reds is still there.

Get your Bridger Ridges at Reds and this hiking appreciation moment brought to you by oboz of Bozeman, Montana certified B Corp. 6 million tree planter and inhabitant of the Greater Yellowstone Ecosystem.

Oboz is the maker of premium quality footwear for the trail and the cupid to the outdoor world. Oboz love hiking. Welcome to the Rock Fight, where we speak our truth, slay sacred cows and sometimes agree to disagree.

This is an outdoor podcast that aims for the head. I'm Colin True and today we're digging into last week's news that is rocking the footwear world. Dick's acquisition of Foot Locker.

But before we get to any of that, are you ready to crown the winner of the best outdoor town draft? Head to Rock Fight Co to vote on who drafted the best list of outdoor towns from last Friday's episode of the Rock Fight.

And tomorrow, Tuesday, May 20, you'll get to open the Container with Doug Schnitzman as he opens the container with musician Greta Morgan. And lastly, are you heading to Switchback in June?

If so, be sure to put the Rock Fight live on your agenda for Tuesday, June 17th at 5 o' clock in the Trailheads Theater on I'll be there with producer Dave Owen. Shantae Salibair. Is Switchbacks gonna be the event of the summer? This will be the event at the event. Don't miss it. And alright, stick around.

We'll be right back.

Chris DeMakes

00:02:09.600 - 00:02:13.440

Welcome to the Rock Fight. Rock Fight. Rock Fight.

Colin True

00:02:16.400 - 00:03:26.400

Alright folks, time to set the record straight. A few weeks back, listeners heard me rant on about a new sandal from Lem's Shoes.

That sandal, the new Switchback sandal, was a classic single strap, single post style that I, without much knowledge, accused of just like someone else. What I wasn't informed on was Lem's unique take on making footwear.

Let's just say a few rocks were thrown back at me, and rightly so because Lem's has really elevated the design of minimalist natural movement footwear, anatomically correct zero drop comfort and lightweight outdoor performance. And the Switchback?

It's crafted from a single piece of material and features a unique single strap design with one buckle for super ease of use, added comfort and getting it on outside. You can go get yourself a pair right now@lemshoes.com where you'll also find that Lem's is running at 20% off sale from now until May 11th.

Oh, and hey retailers, did you know that Lemz is looking for wholesale partners? Hit them up@supportemshoes.com to add a little flavor to your shoe wall.

And be sure to stop by and say hi to the Lems team at their booth at Switchback in Nashville this June. Check out the new Switchback sandal and all of Lem's shoes by heading over to lemshoes.com youm're listening to Rock Fight Radio.

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Colin True

00:04:24.000 - 00:05:10.700

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It will be sure to put a smile on your toes. And now back to the show.

It's Monday, which means we're here with producer Dave, as well as the outdoor industry insider, the consigliere to the rock fight, Captain Owen Comerford. This may end up being an abbreviated show, though, guys, because I do have to go to a colonoscopy. So to all.

All men and women listening to this over a certain age, get your colonoscopy. I think I am the newest inductee on this call to the colonoscopy club, though, right? You guys have all been through this before.

Producer Dave

00:05:11.180 - 00:05:11.780

Oh, yeah.

Captain Eoin Comerford

00:05:11.780 - 00:05:14.140

I've had a couple. It's so much fun.

Colin True

00:05:14.300 - 00:05:15.100

Was that good?

Captain Eoin Comerford

00:05:15.500 - 00:05:15.980

That good?

Producer Dave

00:05:15.980 - 00:05:16.260

Yeah.

Captain Eoin Comerford

00:05:16.260 - 00:05:16.580

Yeah.

Producer Dave

00:05:16.580 - 00:05:17.740

You went back for more?

Captain Eoin Comerford

00:05:18.060 - 00:05:28.260

Went back for more. Yeah. But it's nice to know that we have a podcast host with a very clean colon right now. So that's. That's amazing.

Producer Dave

00:05:28.340 - 00:05:31.700

And soon we're going to have Colin with a clean colon. That's exciting.

Colin True

00:05:31.940 - 00:05:33.700

Welcome back to the colon, Cass.

Producer Dave

00:05:33.780 - 00:05:37.540

That's right. The alliterative options are just outstanding.

Captain Eoin Comerford

00:05:37.540 - 00:05:38.780

Clean colon. Colon.

Colin True

00:05:38.780 - 00:05:48.340

Yeah, maybe I missed my calling. All this outdoor stuff. The colon. Cast with colon. True, Right? That would have been. Yes, Go with the colon, pal. Pronunciation.

Producer Dave

00:05:48.500 - 00:05:48.860

Right?

Captain Eoin Comerford

00:05:48.860 - 00:05:49.860

Ah, right. Yes.

Colin True

00:05:49.860 - 00:05:52.420

He ruined it for everybody. Okay, all right.

Captain Eoin Comerford

00:05:52.420 - 00:05:53.620

Do you get a lot of colons?

Colin True

00:05:54.540 - 00:06:19.220

Yeah, I get a few of those, for sure. Mostly it's the two L's that I get, but I do get the occasional colon. Yeah, colon, mostly.

The weird thing about my name is, and I'm sure your whole life has been spent explaining how to pronounce. I asked you, how do you pronounce your name? That's been your life.

But, yes, it's the people who don't know how to spell my last name, and they always misspell true. And I have. So I think it's like T R E W. They just can't. It can't be just as obvious as T R U E. Right.

Producer Dave

00:06:19.220 - 00:06:20.940

So it can't be true.

Captain Eoin Comerford

00:06:22.060 - 00:06:31.340

So it's interesting, actually. In college, I dated a woman whose last name was Love. First name T R U. That was her actual name.

Producer Dave

00:06:32.140 - 00:06:32.620

Wow.

Colin True

00:06:32.780 - 00:06:34.740

Like, hippie parents. Like, what's going on?

Captain Eoin Comerford

00:06:34.740 - 00:06:38.700

Yeah, pretty much. Without a doubt, pretty much true love.

Colin True

00:06:39.980 - 00:06:43.260

Did she lean into it, or was she like, like, rabid, conservative, you know?

Captain Eoin Comerford

00:06:43.260 - 00:06:45.820

No, no, she. Yeah. Oh, yeah.

Colin True

00:06:45.980 - 00:06:59.820

All right, guys, our top story today is presented by your hub for Ultralight Gear Garage. Grown gear. Head to garagegrowngear.com and check them out.

Have you guys heard Shantae on the Wednesday episodes talking about how she doesn't like when we refer to them as ggg? Yeah, what's that about?

Captain Eoin Comerford

00:07:00.060 - 00:07:03.180

I don't quite understand it, but okay.

Colin True

00:07:03.500 - 00:07:44.320

I think it's nice. Ggg. I kind of like saying it. All right, our story today.

Last Wednesday, word broke on footwear news that Dick's Sporting Goods would be acquiring famed retailer foot locker for $2.4 billion. This merger is a team up that will absolutely roc footwear world to its foundation. Dicks was about was already a go to spot for shoes.

And despite some ups and downs, Footlockers, arguably the most important footwear footwear retailer of the past 40 years, this merger means that we're combining Dick's 855 locations with Foot Locker's 2,400 locations. Now, before we kind of break down this acquisition, I have prepared a quiz for you guys. Okay. You ready? I wish I had got, like, buzzers.

We could, like, ring you in, boy.

Captain Eoin Comerford

00:07:44.320 - 00:07:44.600

Okay.

Colin True

00:07:44.600 - 00:07:57.640

But we're going to do a little. A little footwear history. A Foot Locker history quiz. All right, Are we ready? Okay, let's go for $1,000. What year was Foot Locker founded?

Captain Eoin Comerford

00:07:57.800 - 00:08:02.840

Oh, shit. I'm gonna go 72.

Producer Dave

00:08:03.960 - 00:08:14.600

Okay, that's a good time. 70 or 72, man. I'm gonna say 70. Oh, no. I'm gonna go 68.

Colin True

00:08:15.130 - 00:08:16.090

The final answer.

Producer Dave

00:08:16.250 - 00:08:16.730

Yeah.

Colin True

00:08:17.210 - 00:08:30.970

1974. Owen gets the first one. Yeah. Now, the Foot Locker came about as a. There was a retailer and a shoe brand that led to the creation of Foot Locker.

Can you name the retailer and the shoe brand?

Producer Dave

00:08:33.770 - 00:08:36.570

Well, I know it was Woolworths.

Colin True

00:08:37.050 - 00:08:38.290

Correct. That's the retailer.

Producer Dave

00:08:38.290 - 00:08:40.090

Was the retailer that it came out of.

Colin True

00:08:40.500 - 00:08:40.860

Yep.

Producer Dave

00:08:40.860 - 00:08:50.900

But the shoe brand, somebody like. Like Converse, Buster. Buster Brown or. Or Kenny or somebody like that.

Colin True

00:08:51.380 - 00:08:52.740

Kenny. It was Kenny Shoes.

Producer Dave

00:08:52.740 - 00:08:53.380

Was it really?

Colin True

00:08:53.380 - 00:08:56.660

Yeah, Dave got both of them. Nice job, Dave.

Producer Dave

00:08:57.060 - 00:09:00.740

Both I was shamed into wearing as a youth. So there you go. Like that was.

Colin True

00:09:01.620 - 00:09:14.670

All right. We're tied one to one. Owen got the first question, Dave got the second one. Third question.

Woolworth continued to operate Foot Locker under the moniker of the Woolworth Corporation until 1998, when it changed its name. To what?

Producer Dave

00:09:15.150 - 00:09:17.630

Oh, Woolworth changed its name.

Colin True

00:09:17.950 - 00:09:21.150

Well, there was. Yeah, it kind of switched over to something.

Producer Dave

00:09:21.230 - 00:09:27.390

Group bankruptcy. Is that a name?

Colin True

00:09:30.510 - 00:09:32.110

Well, I thought Owen would be on this one.

Captain Eoin Comerford

00:09:32.350 - 00:09:36.110

Yeah, no, I thought I would, too. I'll know it when I hear it.

Colin True

00:09:36.520 - 00:09:37.560

The Venator Group.

Captain Eoin Comerford

00:09:37.560 - 00:09:40.440

Oh, no, I didn't know. Oh, I did not know that.

Colin True

00:09:40.920 - 00:09:43.640

All right, last question. We're still tied going into the last question.

Producer Dave

00:09:43.880 - 00:09:44.480

Okay.

Colin True

00:09:44.480 - 00:09:50.920

Can you accurately describe the amount of cocaine that was snorted in Footlockers headquarters during the 1980s?

Producer Dave

00:09:54.360 - 00:09:59.720

Yes. I believe they called that swimming pool units or spus. Right.

Colin True

00:10:00.200 - 00:10:03.240

Now there's no way to measure an amount that large, but I think you're right.

Producer Dave

00:10:03.240 - 00:10:19.200

No, there absolutely is. That's right. You could actually measure that in swimming pool units. Right, Absolutely.

The amount of chicanery going on with the Footlocker and the Bird, the growing and popular footwear industry in the 80s is legendary. That's right.

Captain Eoin Comerford

00:10:20.480 - 00:10:22.480

We've got to give it to Dave for spd.

Colin True

00:10:22.720 - 00:10:35.490

I think you win. That was a good one. Nice job, Dave. You win the Footlocker quiz. Remember how important Woolworth was?

I remember going to Woolworth at the local mall for all sorts of stuff growing up and just man, like kind of gone the history now. Right.

Captain Eoin Comerford

00:10:35.490 - 00:10:48.050

I mean, see, that's before my time. Yeah. Because I, I showed up on these shores in 1986. So I think Woolworths was, it was already sort of on the, on the decline back then. Yeah.

Colin True

00:10:48.050 - 00:10:49.730

Did you ever shop at a gimbals?

Captain Eoin Comerford

00:10:50.770 - 00:10:51.490

No, sir.

Colin True

00:10:51.810 - 00:10:53.290

Yeah, we had gimbals as well.

Producer Dave

00:10:53.290 - 00:10:56.610

But you did see. Yeah, we didn't have gimbals out where we were.

Colin True

00:10:56.610 - 00:10:57.770

Was that more of an east coast thing?

Producer Dave

00:10:57.770 - 00:10:59.050

Probably, yeah, definitely.

Colin True

00:10:59.050 - 00:11:01.010

Yeah. You were in Fred Meyer land your whole life.

Producer Dave

00:11:01.570 - 00:11:11.190

Fred Meyer, Nordstrom and Meyer and Frank would have been the regional. And those. Myron Frank got taken out by Macy's.

Captain Eoin Comerford

00:11:11.670 - 00:11:13.990

But we did have a Montgomery Ward, you know.

Producer Dave

00:11:14.070 - 00:11:14.630

Okay.

Captain Eoin Comerford

00:11:14.870 - 00:11:15.350

For sure.

Colin True

00:11:16.150 - 00:11:33.750

Yeah. All right, let's talk about the deal now. I mean, we can talk about the numbers in the deal, but I think we should focus more on the why. Right.

So Owen, you know, Dick's better than anyone in this call, having spent time there. You know, why does this acquisition of Foot Locker for Dick's. Why does it make sense for Dick's?

Like, how does this play into their long term strategy?

Captain Eoin Comerford

00:11:34.260 - 00:13:28.160

The main thing is footwear dominance. Dick's has really done well with footwear over the last number of years.

They actually grew it from like 19% of the business are about $1.8 billion back in 2020 to 3.8 billion. So they've more than doubled the business. It's now 28% of what they do last fiscal year.

And they've done really well with it because they've maintained really great relationships with a lot of the big players. The Nikes, the Adidas of the world, even Under Armour. You know, building shop and shops, et cetera. They've invested a lot in their.

What they call their upgraded premium footwear decks, I think they're called now. And so they've put a lot behind it, and they really see that footwear is the core of everything that they do. Right?

So if you look at a Dick's, the footwear is either in the middle of the store or it's on the back wal wall of the store in the middle. So it's like the. It's like the milk in the grocery store is footwear, right? It is, it's. And it's what brings people into the store, too, right?

Because. Because one of the, one of the things, you know, famously that Ed Stack says is, you know, it doesn't matter what the economy is doing.

If your kid is playing soccer, they've grown out of their soccer shoes, they're going to need new shoes now. Maybe there's a. Maybe there's a choice between whether they go for the $60 shoes or the. Or the $100 shoes, but they're getting some new shoes.

So, so that, that's, that's a key. They look at it. So that's 3.8 billion at Dick's Foot Locker. $8 billion roughly last year. I think 85, 86% of it is footwear.

They do some apparel, some accessories, but it's mainly footwear. About 6.7 billion. So combine those two together, you've got a $10.5 billion footwear powerhouse.

Colin True

00:13:29.120 - 00:13:29.760

Incredible.

Captain Eoin Comerford

00:13:30.000 - 00:15:01.790

And that's the real driver you look at. What has really driven Dick's success of late is the fact that has this leverage with the brands because of their, you know, their, their, their.

Their position in the marketplace. They're taking share, their premium merchandising position. And so they've been able to.

To get a lot of the hot brands and a lot of the hot styles that maybe some of the others, including Foot Locker, have not been able to get. And it's getting those sorts of exclusives that really drive profitability. So that's, that's the, the sort of. The second aspect, the third.

The third thing I would say is store footprint. Right? Dick's has almost 900 stores. Well, like 855 or so across all their. Their banners. Foot Locker has 2,400 stores.

That's a lot of flipping stores now. They're much smaller, obviously, right.

But, but, so, so actually, in terms of square footage, Dick's is about 43 million square feet, footlocker about 13 million so, you know, about a third the size maybe, but still, that's a lot of doors across the country, but then also internationally, and we'll get to that in a minute, whether that's a plus or minus. The other thing is their loyalty program. So Dick's Scorecard has been very successful. It drove 75% of their sales last year through Scorecard.

And Footlocker has been kind of struggling with their loyalty program. So this gives Dick's an even bigger audience and adds even more that 75%.

Colin True

00:15:02.030 - 00:15:05.470

Of the sales at Dick's were tied back to their loyalty program.

Captain Eoin Comerford

00:15:05.710 - 00:15:51.770

Exactly. So they did whatever it was 13 point something billion last year. 13.8, maybe 75% of that was through Scorecard. So it's a very successful program.

And if they can increase the value of that or the touch points of that program, it makes it even stickier for them. And then finally, the last thing in all of these deals is synergies. And synergies, again, as we said, is kind of Latin for layoffs.

But basically what it means is they're going to, you know, they're going to look to. You don't need all the overhead of two large, you know, large, big bucks or when I guess not big bucks, large retail chains.

You don't need to duplicate all of the headcount. So I'm sure there's going to be some culling there to save some money along the way.

Colin True

00:15:52.410 - 00:16:23.030

I was curious about the assortment difference. I mean, I think of Dick's as sort of like actually Dick's.

I was thinking about this in terms of they're probably more of a threat even to like run specialty shops. Right. Because it has become like a go to just athletic shoe stop. Whether it's your kids cleats like you said, or I need a new pair of running shoes.

I think a Foot Locker is, hey, that's a mall store. That's probably more of that, like, you know, it's, it's cooler shoes, it's Air Force ones, it's things like that. Right.

I mean, I know I'm very much generalizing here. Is there, is there a complementary aspect of it when you think of the assortment of like what the two retailers carry or is there a lot of overlap?

Captain Eoin Comerford

00:16:23.350 - 00:16:53.730

There's, there's a ton of overlap.

But yes, I think you're characterizing it the right way, which is to say that Foot Locker tends to be a little bit more lifestyle street, et cetera, whereas Dick's, you know, does tend a little bit more into the true functional user Soccer, basketball, run, et cetera.

But, but there's also a lot of overlap in between, like those, those high heat styles, as they call them, you know, are certainly, you know, a little bit more on the lifestyle side.

Colin True

00:16:54.690 - 00:17:04.890

Dave, do you have a brand observation about the two kind of the merging? Like, when you were you, what was your, your initial reaction when you saw the headline?

Was it like, oh, yeah, it makes sense or like, oh, that's interesting. I have to think about that for a second.

Producer Dave

00:17:04.890 - 00:19:20.880

No, my first reaction was didn' own Foot Locker. I was like, you know, I'm surprised that this hasn't happened before.

It is interesting though in the sense that this is kind of like the shoe has turned here in that Dicks is definitely the more powerful kind of upward trending brand and stock and everything. Right.

You know, in terms of its mix, like you said, it's starting to get kind of first, first crack at some of these styles that maybe would have only been exclusive to Foot Locker before, at least from a mass retailer. And so now you've got Foot Locker that has been struggling. I mean, Mike, Mike, you know, you brought up all those locations.

My, you know, question is, are they going to keep them, you know, as much as they want the expansion, I can't believe that it's going to continue with that. Foot Locker also has a pretty big investment like, like a big investment in Goat, the website that's all secondary sneaker.

So it's really kind of a big player in that. So, you know, are they going to double down on that side of the equation?

But there's just, I mean, all those malls and all, all forms of small towns and inner cities and things like that. Will they keep the, will they keep that footprint? I'm not, I'm not sure that they will.

But, but it is just like I said, it's interesting how they have switched.

But for, you know, for a footwear person, Foot Locker, even though it has kind of lost its luster, even an outdoor, you know, ACG doesn't happen without a footlocker. Timberland, the trend that we know, Timberland, the brand we know today, doesn't happen without Foot Locker.

I would even say brands are, you know, some of the Moabs, the Hydros, the, the speeds, things like that, or excuse me, from Merrell also get this elevated boost that Foot Locker provided. Probably North Face in the same way or some of the Salomon stuff, you know, from the recent kind of Gorp Corey kind of kind of vibe.

I think just being in Foot Locker and that added Added eyes of the. Of the people that do kind of populate the sneaker world, give credit, give good credibility to the outdoor brands, you know.

So I do think that that's probably a thing they'll want to keep, but it'll be interesting. Does. Does Dick's try to grab all of that for themselves?

Colin True

00:19:21.120 - 00:19:54.620

Two numbers that I want to point back to Owen, and what you were saying. Like, the one, the fact that they've added. That Dick's has added $2 billion in footwear sales in four years. Like, that's incredible.

Number one, like that just good work. I guess it seems like it has a strategy paid off. And two, like the loyalty. 75% of the sales being tied to the loyalty program. Wow.

Like, just did not know that there were that many loyal shoppers to Dick's. And it kind of sets then the circumstances of what this merger can mean.

And what has the overall market reacted to, how this has come together in the days since it has been announced.

Captain Eoin Comerford

00:19:54.860 - 00:20:00.510

The stock market has hated it. Really? I mean, there are shares.

Producer Dave

00:20:00.830 - 00:20:02.110

Not Foot Locker stock.

Captain Eoin Comerford

00:20:02.350 - 00:23:27.780

Well, no, yeah, sure, because.

Well, that's part of it, actually, Dave, is because I think part of the reason that market hates it is because of the premium that Dick's put out there. Right. I mean, their stocks were. The Foot Locker stocks were trading for about $13 the day before it was announced.

And then Dix offered to buy it at $24. I mean, that's almost a 90% premium. And typically in these kind of deals, 20, 30% would be a typical premium.

Or you look at over a 60 day trading window and you take an average of that, maybe 40, 50%, they're at 66% of that trading window. So it seems a little rich. Now, in fairness, Foot Lockers stock has been kind of in free fall this year.

So you don't only have to go back to December to see a $24 number. So that I'm sure was a big driver in the premium. But yeah, they gave up a lot. But the problem is.

So the market's maybe saying they paid too much on the one hand. I'm sorry, in terms of the market reaction, they were down 15% on the day this was announced.

Okay, so Dick's lost 2.05 billion in market cap on the day that it announced this 2.4 or $2.5 billion acquisition. So that's not good.

But what it really tells me, though, more than the premium that they paid, I think there's a concern in the market that Dick's is Going to get distracted. That they have really been.

I think the market has been rewarding them, quite frankly, for really, quite, really good execution against some really clear strategies to be this premium player, to have this premium merchandise from the top brands. And it's been working. House of Sport, all the rest of it. I mean, they've been growing, as you say, they've been adding $2 billion in footwear.

Meanwhile, Foot Locker lost a billion dollars in footwear over roughly the same period. So they're winning.

And now it's like, well, okay, will they be able to continue to win and continue to fund more House of Sports and do all these other things if they're distracted by trying to turn around Foot Locker, who, as Dave said, has been struggling. Foot Locker has been closing stores. I think they've closed like 300 doors over the last few years. So, yeah, I think there's a lot of concern there.

Also, Dix is going to have to take on debt more than likely to fund this thing. And historically, they've had a really clean balance sheet. So I think that's a concern.

And then finally, international, some people are saying, oh, the reason that Dix is doing this is because they want to get international presence. Personally, I don't think so. I mean, Dix has very intentionally avoided international. That was an option.

They could have expanded into Canada, they could have expanded into Europe. And they said, no, we don't want that complexity.

We're going to keep an eye on what's core to Dick's and be the best operator in sporting goods in the United States. And that's been super successful for them. So, yeah, so now we get all the. All this other stuff. So, yeah, interesting. We'll see how it all plays out.

Colin True

00:23:29.060 - 00:23:39.170

What about the brands? Right, because if you're an athletic footwear brand that we talked about, there's crossover in the assortment and things like that.

I mean, do we anticipate any measurable impact to the brands or is it more likely for them business as usual?

Captain Eoin Comerford

00:23:39.880 - 00:24:27.620

I don't think it's business as usual. I think Dix didn't do this to not have dominance in the space. That's the big carrot here, is that $10 billion a year number. And it was interesting.

Ed Stack in his comments about the deal really actually pointed to Nike and said, hey, one of the reasons that this deal makes sense is because Nike is re engaging with wholesale and really wants. And actually, if you look at Foot Locker, you go back, you know, to 20. You go back to, I think like 20, 20, 21 or whatever.

At one point Nike was 75% of their business. 75%. That is unbelievable.

Colin True

00:24:27.620 - 00:24:28.220

That's huge.

Captain Eoin Comerford

00:24:28.220 - 00:25:16.020

Unbelievable. Right? And according to some of the numbers I saw, they're down to by, by 2023 it was down to like 35%.

So Nike really pulled back on, on the allocation that they were getting, but also not just the amount of product they were getting, but also the allocation of the high Heat product. Right. And Dick's was benefiting from that. Right. So I think the expectation is, hey, Nike's leaning in again.

We, Dick's have an amazing relationship with Nike.

So those two things together will actually be able to really raise the level of the assortment in your average footlocker and you drive it to the next level and also bring in all the hot product from Adidas on Hoka, et cetera, et cetera. So yeah, gonna be interesting.

Producer Dave

00:25:16.100 - 00:25:29.060

I think that Dick's just was getting, getting left out of complex con and just couldn't get tickets and so that's why they're doing this. Yeah, Billion dollar play to get invited to the cool parties.

Colin True

00:25:29.620 - 00:25:35.300

Maybe. They've secretly been really cool this whole time though. I mean it's kind of just the numbers and the loyalty is pretty outstanding.

Captain Eoin Comerford

00:25:35.860 - 00:26:55.980

No, Colin, operations maybe are not that sexy, but when you operate a really clean store, I think it works. I think the bigger question though about that whole sort of footwear dominance thing is antitrust. Will this thing draw regulatory scrutiny?

Personally, I think that if we didn't have Donald Trump in the White House, this deal would never have happened under a prior FTC commissioner, Lina Khan, who shut down the Tapestry deal, et cetera.

I don't think this deal would have passed muster or the risk of it being killed would have said we're not going to spend the time to try to pull this thing together.

And so yeah, I think what's perceived as a much more business friendly administration and you know, and also obviously Ed Stack is a very big Republican, you know, political player actually. He reportedly reportedly looked at a presidential run in 2020. So yeah, anyway.

But yeah, so I do think that having this administration in place was a catalyst to making this thing happen.

Producer Dave

00:26:56.970 - 00:27:14.410

So hold on, one quick question back to kind of your time in the valuation. What would this strategic move be?

Why did they pay a $10 premium to a stock that was trending down when they probably could have gotten it for that 30% like you said, what would be the reasoning for that?

Captain Eoin Comerford

00:27:15.850 - 00:27:43.910

The reasoning is likely because they felt like that's what they had to pay to get enough shareholders to back the deal because of the recency at which it was at that level. If it had been 10 months or 12 months since it was $24 a share, maybe then you wouldn't have done it.

I think it was more a case of that they just won't get enough people to buy in at that level.

Colin True

00:27:44.390 - 00:27:52.350

I just want to go back to one thing you said, Owen. Can we still describe Donald Trump as a business friendly president? You know, but that's why, that's why.

Captain Eoin Comerford

00:27:52.430 - 00:28:06.510

That'S why I said, quote, unquote, yes. Yeah. There's one business that he's very friendly to, and that is the Trump family business. But everyone else, maybe not so much.

Colin True

00:28:07.470 - 00:28:38.640

This is an outdoor podcast, so let's talk about a little bit how this pertains to the industry. Right, because this is a pretty big blow to the. Not blow, but a pretty big news in the retail landscape.

You know, the actions of these bigger players can really impact the retail playing field. You know, I look at Dicks as kind of being right there with REI and the general outdoor.

I know that, you know, you guys might have some different opinions on that, but it definitely, they kind of get mentioned in the same breath a lot. You know, do we see this as a move that strengthens them in that kind of competitive landscape or just in general?

What does this mean for the future of the outdoor industry, if anything?

Captain Eoin Comerford

00:28:39.680 - 00:28:59.879

First of all, I definitely don't agree that REI and Dick's are in the same breath when it comes to outdoor, at least for true enthusiasts. You can equip yourself for a backpacking trip at rei.

You cannot equip yourself for a backpacking trip at a Dick's Sporting Goods unless you want to go.

Colin True

00:28:59.879 - 00:29:00.880

Technically you can.

Captain Eoin Comerford

00:29:01.200 - 00:29:15.130

Well, okay, yeah, if you want to have a 50 pound pack and eat whatever. Granola bars. But no, it's, it's not the same.

Colin True

00:29:15.450 - 00:29:16.850

It's not the same thing. I got you.

Captain Eoin Comerford

00:29:16.850 - 00:29:34.410

No, but here, here's, here's what I would say, though, is what we may see is actually because I, I do think this is a lot of. This is about footwear dominance and leveraging that with brands. We may see REI get lone peaked by the Dicks of the future.

Colin True

00:29:35.050 - 00:29:38.330

Might lose out on a few, few exclusives.

Captain Eoin Comerford

00:29:39.110 - 00:29:57.670

Exactly.

Because I think if you've got a $10 billion footwear behemoth saying, hey, listen, we don't want to see your latest thing show up anywhere else, including and especially rei, then that's what will happen.

Colin True

00:29:58.390 - 00:30:32.290

No, that's true. And that is Interesting. Given the stated goals of REI to do more in the run world. Right.

And kind of build in their almost like shop and shop style of run specialty in rei. The lone peak is a good example, by the way. I love the idea using, you know, lone peak like that. You getting. Getting lone peaked. That's great.

We got to make sure we keep that around. But the. That is, it will be interesting. On the footwear side, how does this play out?

Because if you're someone like an on, right, who is an athletic brand who kind of. But you sell to both entities, you know, where do you want to. Where are you going to give the exclusive?

It's going to be to the Foot Locker Dick side of the aisle, I would think.

Producer Dave

00:30:32.930 - 00:31:21.910

Exactly. Well, it's going to also allow though Dicks too. I mean, I think they've naturally kind of gone this way in the last few years.

And why maybe we see the big rise in Dicks. They've doubled on the performance side of the business. Right. As much as they carry a broader skew.

You know, their back to school is always on team sports. Right. They're really put even the outdoor stuff. There's the, the lifestyle side of it. But they want the trail runner.

They want the things that have some kind of credibility to it. And so this would allow them to let Foot Locker continue to play the lifestyle side.

So on, for example, can lean into that side of their business while still, you know, offering the performance. I don't know.

Exclusivity is the right word, but definitely giving it kind of two different environments for the brands to express themselves under one one kind of buying group.

Captain Eoin Comerford

00:31:22.390 - 00:31:37.800

It'll be interesting also in as. As this Dick's footlocker combo negotiates with brands how they view outdoor specialty. Right.

Because Dick's very much views the Reis of the world as their direct competition.

Colin True

00:31:37.800 - 00:31:38.080

Right.

Captain Eoin Comerford

00:31:38.080 - 00:32:16.520

Big Box versus Big Box Dicks, Shields, other players in that space academy, they're the ones that they're really worried about Amazon. I'm not so sure that they're that worried about independent outdoor specialty. Right. In the grand scheme of things, in some cases even Run Specialty.

Where does Run Specialty fit into Dick's view of the world? Do they actually like to see Run Specialty drive further business to them or do they want all that business for themselves? So hard to say really.

But I do think the bigger players will be the ones who will be more impacted by this move.

Producer Dave

00:32:17.560 - 00:32:22.200

So Roadrunner, for example, where do they fit in ZIX targeting?

Captain Eoin Comerford

00:32:24.120 - 00:33:17.370

I don't think this is good news for Roadrunner.

I really don't because Dick's really does bring that, as we were saying, that more functional expertise in the footwear space into this and it will be interesting. I think the biggest change you're going to see in Foot Locker is in merchandise and merchandising.

So the assortment and then how it's presented to the customer, because that really is where Dick's sporting goods shines. Right. And so which way will it go?

Will they lean into Foot Locker on more the like lifestyle, street side of things or will they try to introduce more of the Dicks performance functional side?

And if they do, then I think then Run Specialty is probably going to feel some pain from that by having Foot Locker be more of a Run Specialty player.

Producer Dave

00:33:18.170 - 00:33:28.250

I'm just hoping that we now see all of the Dick's staff wear, what is it, the umpire uniforms, the referee uniforms on the floor. That'll be fantastic.

Colin True

00:33:28.250 - 00:33:33.950

No Dick staff, they don't like them to be seen. That's the thing about when you shop at a Dick Disc. The discs, they're just like, you know.

Producer Dave

00:33:33.950 - 00:33:38.950

How would you know that they're there? Well, if they're zebras, they'll blend right in. That's kind of the goal.

Colin True

00:33:39.110 - 00:33:39.990

Just stop moving.

Producer Dave

00:33:40.070 - 00:33:40.550

Yeah.

Colin True

00:33:42.790 - 00:34:14.320

Well, today is the last day of small business sales week organized by Garage Grown gear. They've got 90 plus small gear brands running incredible deals on their own respective websites.

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Check out all the deals at the link in the show notes or just head over to garagegrowngear.com check it out today.

Chris DeMakes

00:34:15.600 - 00:34:17.680

It's time for a parting shot.

Colin True

00:34:19.520 - 00:36:09.690

All right, it's time for the parting shot and I'm recording this the day after the conversation you just heard. My parting shot is to all of you to make sure that if you are of a certain age, you get that colonoscopy that we were talking about. So I'm 49.

Yesterday was my first colonoscopy.

The guidelines state you're supposed to start having them at 45, but for the past few years, I was told that I could wait until I was 50 because I lead a pretty healthy lifestyle, I guess. And I decided I didn't want to wait anymore because you know what? My dad waited. He actually didn't wait. He just avoided getting a colonoscopy.

And then in his 70s, guess what happened? Yeah, colon cancer. He would end up recovering after having surgery and getting a colostomy bag and all of that stuff.

But it was pretty obvious that if he had started being proactive earlier in his life that he probably would have avoided all of that. So I went yesterday and it's just like everyone tells you, it's not that big of a deal.

I came through with zero polyps, which means I don't have to do it again for 10 years. So effectively I'm kind of like, like killing it at being middle aged. I'm sort of the best at being middle aged right now.

No, but seriously, if you're listening to this and you're over 45 or you have someone in your life who is over 45, have them go get this done. It's not that big a deal. Yeah, it sucks to have a day where you can't really eat anything and you got to poop a lot. Oh, well, you know what? The.

The way I feel today knowing what I know made that like it's a non issue. So go get it done. That's my parting shot to everyone out there listening. Get your colonoscopies, prevent, you know, pretty horrible disease.

So that's the show we want your. Send them to myrockflightmail.com the Rock Fight is a production of Rock Fight LLC for producer Dave our consigliere, Owen Comerford. I'm Colin True.

Thanks for listening. And here to take us out, it's our guy, Chris Demaikz and he's gonna sing the Rock Fight Fight song right now. We'll see you next time. Rock fighters.

Chris DeMakes

00:36:18.180 - 00:37:08.830

Welcome to the Rock Fight where we speak our truth, slay sacred cows and sometimes agree to disagree.

We talk about human powered outdoor activities and big bites about topics that we find interesting like pop culture music, the latest movie reviews, ideas that aim for the head. This is where we speak our truth. This is where we speak our truth. Rock fight. Rock fight. Rock fight. Welcome to the Rock fight. Rock fight. Rock fight.

Welcome to the rock flight Rock flight. Rock fight. Rock fight. Rock fight. Rock fight. Welcome to the Rock fight. Rock fight. Rock fight. Rock fight.

Producer Dave

00:37:09.310 - 00:37:10.670

Rock flight Fight.