- Dick's will close underperforming Foot Locker stores, cut stale inventory, and take a bold, "clean out the garage" approach to turnaround.
- Pilot store tweaks show encouraging results; company aims for Foot Locker to be accretive by 2026 with refreshed merchandising.
In the cutthroat world of retail, where consumer tastes shift faster than a sneaker drop, Dick’s Sporting Goods is diving headfirst into a gritty turnaround for its newly acquired Foot Locker chain.
The move, detailed during the company’s third-quarter earnings call this week, signals a no-holds-barred approach to reviving a struggling icon—one that involves shuttering underperforming stores, slashing outdated inventory, and experimenting with store tweaks that could redefine how we shop for kicks.
It’s a high-stakes bet for Dick’s, but early signs from a handful of test locations are sparking cautious optimism.
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Details of the Retail Company Acquisition
The acquisition of Foot Locker, finalized earlier this year, thrust Dick’s into a familiar retail drama: a once-dominant brand grappling with excess baggage from years of missteps.
Executive Chairman Ed Stack didn’t mince words during the call, framing the strategy with a folksy analogy that cuts right to the chase.
“Let me be candid: Foot Locker strayed from retail 101 and did not execute the fundamentals,” Stack said, pinning much of the blame on shaky inventory choices and lackluster store setups.
He likened the cleanup to a simple household chore: It was time to “clean out the garage” at Foot Locker, zeroing in on stores, stock, and other assets that no longer fit the vision.
At the heart of this purge is an aggressive inventory reset.
Dick’s plans to clear out unproductive merchandise across Foot Locker’s network by year’s end, paving the way for a “fresh start” in the new year.
The downside? A hefty hit to gross margins—between 1,000 and 1,500 basis points in the fourth quarter alone—thanks to deep discounts on that stale stock.
But Stack is betting big on the rebound, forecasting “meaningful gross margin improvement” come 2025.
Foot Locker’s third-quarter results underscored the urgency: The chain posted a $46 million loss, dragging on Dick’s overall bottom line despite the parent company’s solid performance.
Details of the Retail Store Closures
Store closures are next on the chopping block, though Dick’s isn’t spilling exact numbers just yet.
CFO Navdeep Gupta stressed that the axe won’t fall solely on unprofitable spots—it’s about alignment with a forward-looking strategy.
“We’re evaluating whether unprofitable stores could become viable with the right product, innovation, and merchandising,” Stack added, hinting at a nuanced review process.
This comes as Foot Locker was already in the midst of its own pre-acquisition refresh, rolling out new concepts for its core banner and Kids Foot Locker lines.
Dick’s intends to keep some of those upgrades, like community-oriented features, but plans to swap out weaker elements—think underused zones—for punchier apparel displays that could draw in more browsers.
To test the waters without burning cash, Dick’s kicked off an 11-store pilot program tweaking merchandising and product mixes.
Described by Stack as “pretty capital light,” the initiative has yielded “encouraging results.”
The changes sound straightforward but smart: swapping out the endless “run-on sentence of shoes” on those iconic footwear walls for segmented displays that spotlight key styles.
Fresher products are getting pride of place, too, aiming to make the stores feel less like a warehouse and more like a curated vibe.
If it scales, this could be the spark Foot Locker needs to recapture its street cred.
Plans for 2026
The timeline is ambitious, to put it mildly. Dick’s eyes an “inflection point” by next year’s back-to-school season, with Foot Locker flipping to accretive—meaning it actually boosts the parent’s profits—by 2026.
That’s no small feat, especially with headwinds like Nike’s pivot to direct-to-consumer sales leaving Foot Locker short on hot inventory.
Comparable sales at Foot Locker dipped 4.7% in the quarter on a pro forma basis, a stark reminder of the work ahead.
Yet Stack’s tone carried a note of resolve: “Our conviction that we can turn this business around has only grown.”
He chalked up the woes to fixable basics—inventory mismanagement and meh in-store merchandising—rather than some existential curse.
Bolstering the leadership bench, Dick’s tapped two heavy hitters to steer the ship internationally and stateside.
Effective December 3, British exec Matthew Barnes steps in as president of Foot Locker International, bringing nearly three decades of retail chops from stints at Aldi and Tesco.
It’s a deliberate pick—Stack wanted a European native to helm the overseas ops. Closer to home, Ann Freeman, a 26-year Nike vet, took the reins as president of North America back in September, injecting insider know-how into the mix.
Of course, this isn’t happening in a vacuum.
What Happens Now?
Dick’s core business is humming along nicely, with third-quarter net sales up 5.9% and comparable sales climbing 5.7%.
The company cranked open 13 House of Sport superstores in the period—its busiest launch quarter ever—and teamed up with Fanatics for a “Collector’s Clubhouse” in 20 of those spots, stocking trading cards and memorabilia.
Every future House of Sport will get one, too. CEO Lauren Hobart, ever the protector of her flagship, underscored the need to “ring-fence” the Dick’s team amid the Foot Locker frenzy, ensuring the mothership stays on course.
That focus paid off: Dick’s bumped its full-year comparable sales guidance to 3.5% to 4%.
Industry watchers aren’t shocked by the heavy lifting required.
“Foot Locker is far from a star player and has been a retail laggard,” said Neil Saunders, managing director at GlobalData.
He pointed to the need for “significant training” across the board, but noted a silver lining: By next back-to-school, Dick’s will have full sway over Foot Locker’s buying decisions, teeing up “visible changes” that could finally stem the slide.
As holiday shoppers flood aisles in search of deals, Foot Locker’s reset feels like a microcosm of retail’s broader reckoning—pruning the dead weight to make room for what’s next.
Will it pay off? Dick’s is all in, and with Stack’s garage-cleaning mindset, they’re not afraid to get their hands dirty.
For now, those pilot stores offer a glimmer: Maybe the old Foot Locker can lace up and run again.
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