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Dick’s spent $2.4 billion on Foot Locker last fall. Here’s what’s actually happening.
CVS closed over 1,100 stores in four years. Rite Aid filed bankruptcy twice and is now completely gone. Walgreens went private via acquisition to Sycamore Partners. Between the three of them they left behind thousands of empty buildings.
Meanwhile, Footlocker is focused on larger 10,000-15,000 sq ft properties rather than the traditional < 3,000 sq ft mall store.
“During Q4, our Fast Break stores drove very strong, positive comps, actually meaningfully exceeding the Dick’s business, while also delivering strong gross margin improvement,”
Appears to be working.
Transcript
DICK'S acquired Foot Locker for $2,400,000,000 last fall, and somehow, that's not even the most surprising part. The wild part? They're closing Foot Locker's mall stores and moving them into vacant drugstores. The building where you used to pick up Pedialyte and aspirin at midnight is now where you're getting your Nikes. CVS, Walgreens, and Rite Aid left behind thousands of empty boxes. These were corner lots with dedicated parking, high traffic intersections, and landlords who worse suddenly very open minded on best. And that's just one part of a three part fix. First, they're cutting yes by roughly 30%. Fewer skews means cleaner stores, better inventory turns, and less capital trapped in shoes that look like they were designed during a fever dream. Second, they're upgrading to the new best break format. This means better layout, better merchandising, and a store that feels less like a fluorescent hallway attached to a pretzel stand. Shout out Annie Ann's though. Third, and this is the big one, get out of the mall entirely and into the real estate nobody else wanted. CVS is good, Walgreens is gone, Rite Aid is good, and Dick's is moving in. And honestly, with a name like that, you saw this coming.
