Core Points - DICK'S Sporting Goods is initiating an Exchange Offer to acquire Foot Locker's outstanding 4.000% Senior Notes due 2029, offering up to $400 million in new DICK'S Notes in exchange [1][10] - The Exchange Offer is contingent upon the successful completion of the merger, where Foot Locker will become a wholly owned subsidiary of DICK'S [1][10] - DICK'S is also soliciting consents to amend the indenture governing the Foot Locker Notes, aiming to eliminate restrictive covenants and certain events of default [2] Exchange Offer Details - The Exchange Offer will expire at 5:00 p.m. New York City time on August 1, 2025, unless extended [9] - Holders of Foot Locker Notes can receive a Consent Payment ranging from $2.50 to approximately $5.00 per $1,000 principal amount, depending on the amount tendered [3][12] - Eligible holders who tender their Foot Locker Notes by the Early Participation Date will receive an Early Participation Premium of $30.00 [13] Financial Considerations - For each $1,000 principal amount of Foot Locker Notes accepted for exchange, holders will receive $970 principal amount of DICK'S Notes [14] - The DICK'S Notes will have the same interest payment dates, maturity date, and interest rate as the Foot Locker Notes, but will replace the fixed redemption schedule with a customary investment-grade redemption schedule [15] Conditions and Modifications - The Exchange Offer and Consent Solicitation are conditioned upon the tendering of at least a majority of the aggregate principal amount of Foot Locker Notes [10] - DICK'S reserves the right to modify or terminate the Exchange Offer and extend the Early Participation Date, Expiration Date, and settlement date [11]

Core Insights - Foot Locker, Inc. reported first-quarter fiscal 2025 results with total revenues of $1,788 million, a decline of 4.6% year over year, missing the Zacks Consensus Estimate of $1,826 million [3][4] - The company posted an adjusted loss of seven cents per share, a significant decrease from adjusted earnings of 22 cents in the prior-year quarter [3] - Comparable sales fell by 2.6% year over year, with a notable 8.5% decline in international operations, particularly in Foot Locker Europe [4] Financial Performance - Gross profit was $514 million, down 5.5% year over year, while the gross margin rate increased by 40 basis points to 28.7% [5] - Selling, general and administrative (SG&A) costs decreased by 0.7% year over year to $458 million, but as a percentage of sales, it deleveraged by 100 basis points due to lower sales and technology investments [6] - Merchandise inventories stood at $1.67 billion, reflecting a 0.4% increase from the previous year [11] Strategic Initiatives - The company is executing its Lace Up Plan strategies and preparing for the completion of the DICK'S Sporting Goods transaction [1][8] - Focus during the quarter included rolling out the Reimagined and Refresh programs, enhancing digital offerings, and strengthening customer engagement through the FLX program [2] - Foot Locker opened nine new stores and closed 56 stores, while also remodeling or relocating 11 stores [7] Market Position - As of May 3, 2025, Foot Locker operated 2,363 stores across 20 countries, with an additional 236 licensed stores in the Middle East, Europe, and Asia [8] - The company ended the fiscal first quarter with cash and cash equivalents of $343 million and long-term debt of $440 million [11] - Over the past three months, Foot Locker shares gained 33.7%, outperforming the industry growth of 4.9% [11]

Financial Performance - For the quarter ended April 2025, Foot Locker reported revenue of $1.79 billion, down 4.5% year-over-year, and EPS of -$0.07 compared to $0.22 in the same quarter last year [1] - The reported revenue was a surprise of -1.77% compared to the Zacks Consensus Estimate of $1.83 billion, with the consensus EPS estimate also being -$0.07, indicating no EPS surprise [1] Key Metrics - Comparable store sales decreased by 2.6% year-over-year, significantly worse than the six-analyst average estimate of -0.3% [4] - Total number of owned stores was 2,363, below the three-analyst average estimate of 2,465 [4] - North America sales totaled $1.34 billion, slightly below the $1.35 billion estimated by two analysts [4] Segment Performance - Sales by segment included Kids Foot Locker at $183 million, slightly above the two-analyst average estimate of $181.05 million [4] - WSS sales were reported at $160 million, compared to the $159.48 million average estimate [4] - EMEA Foot Locker sales were $346 million, below the average estimate of $390.11 million [4] Stock Performance - Foot Locker shares returned +94.8% over the past month, outperforming the Zacks S&P 500 composite's +6.7% change [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance in the near term [3]

Core Viewpoint - Foot Locker reported a quarterly loss of $0.07 per share, aligning with the Zacks Consensus Estimate, compared to earnings of $0.22 per share a year ago [1] - The company posted revenues of $1.79 billion for the quarter ended April 2025, missing the Zacks Consensus Estimate by 1.77% and down from $1.88 billion year-over-year [2] Financial Performance - Foot Locker's earnings for the previous quarter were expected to be $0.73 per share, but the actual earnings were $0.86, resulting in a surprise of 17.81% [1] - Over the last four quarters, the company has surpassed consensus EPS estimates two times [1] - The company has topped consensus revenue estimates just once over the last four quarters [2] Stock Movement and Outlook - Foot Locker shares have increased by approximately 9.8% since the beginning of the year, while the S&P 500 has gained only 0.1% [3] - The sustainability of the stock's price movement will depend on management's commentary during the earnings call [3] Earnings Estimates and Revisions - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $1.88 billion, and for the current fiscal year, it is $1.17 on revenues of $7.92 billion [7] - The estimate revisions trend for Foot Locker is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Retail - Apparel and Shoes industry, to which Foot Locker belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Performance - Comparable sales decreased by 2.6% from the prior-year period, with North America region sales decreasing by 0.5%[5] - Net loss is expected to be $363 million, compared to net income of $8 million in the same period last year[5] - First quarter loss per share is expected to be $3.81, compared to earnings per share of $0.09 in Q1 2024[5] - Non-GAAP net loss is expected to be $6 million, compared to net income of $21 million in the prior-year period[5] - For the first quarter of 2025, the company reported a pre-tax loss of $270 million compared to a pre-tax income of $13 million in the same period of 2024[20] - Adjusted income before income taxes (non-GAAP) for Q1 2025 was $2 million, down from $29 million in Q1 2024, reflecting a significant decline[20] - The net loss for Q1 2025 was $363 million, compared to a net income of $8 million in Q1 2024[20] - Adjusted net loss income (non-GAAP) for Q1 2025 was $6 million, a decrease from $21 million in Q1 2024[20] - Diluted loss per share for Q1 2025 was $3.81, compared to diluted earnings per share of $0.09 in Q1 2024[20] - Adjusted diluted loss earnings per share (non-GAAP) for Q1 2025 was $(0.07), down from $0.22 in Q1 2024[20] Impairment Charges - Non-cash impairment charges totaling $276 million are expected, primarily related to a tradename and goodwill impairment[5] - The company recorded impairment charges of $140 million for the WSS tradename and $110 million for goodwill in Q1 2025 due to a decline in stock price and market capitalization[21] - A valuation allowance of $117 million was recorded on deferred tax assets related to net operating loss carryforwards in Q1 2025, indicating a reduced likelihood of utilizing these assets[22] Merger Agreement - Foot Locker and DICK'S Sporting Goods announced a merger agreement with an equity value of approximately $2.4 billion and an enterprise value of approximately $2.5 billion[6] - Shareholders will have the option to receive either $24.00 in cash or 0.1168 shares of DICK'S common stock for each share of Foot Locker common stock[6] - The transaction is subject to shareholder approval and is expected to close in the second half of 2025[7] Strategic Focus - The company is focusing on enhancing in-store experiences and digital offerings, including new mobile apps for Champs Sports and Kids Foot Locker[2] - The company closed all stores in South Korea, Denmark, Norway, and Sweden as part of its strategy to improve international operations[21] - The company reported a $5 million gain on the sale of its Greece and Romania businesses in Q1 2025[22] Reporting Schedule - Foot Locker plans to report full financial results for Q1 2025 on May 29, 2025, but will not hold a conference call due to the pending transaction[8]

Group 1 - Foot Locker, Inc. is set to release its first-quarter earnings results on May 29, with analysts expecting earnings of 11 cents per share, a recovery from a loss of 5 cents per share in the same period last year [1] - The projected quarterly revenue for Foot Locker is $1.88 billion, slightly down from $1.9 billion a year earlier [1] - Foot Locker has entered into a definitive agreement to be acquired by Dick's Sporting Goods, valuing Foot Locker's equity at approximately $2.4 billion and its enterprise value at about $2.5 billion [2] Group 2 - Foot Locker shares closed at $23.90 prior to the acquisition announcement [2] - Recent analyst ratings show a mix of neutral and downgraded positions, with price targets generally raised to $24 by multiple analysts [8] - Citigroup, Baird, Barclays, Needham, and JP Morgan analysts have all adjusted their ratings and price targets for Foot Locker, reflecting a cautious outlook [8]

Core Viewpoint - Foot Locker Inc is set to announce its quarterly results on May 29, following a recent acquisition by Dick's Sporting Goods for $2.4 billion, with the stock currently consolidating around $24 and showing a year-to-date increase of 10.2% [1] Group 1: Earnings and Stock Performance - The stock has a history of significant post-earnings movements, averaging a next-day swing of 17.5% over the past two years, while current options are pricing in a much smaller expected move of 2.4% [3] - A potential short squeeze could occur if earnings results are positive, as short interest accounts for 16.1% of the stock's available float, equating to over three days' worth of buying power [3] Group 2: Volatility and Options Trading - Investors may consider options as a strategy to manage earnings volatility, as Foot Locker's Schaeffer's Volatility Index (SVI) is at 23%, which is in the low 10th percentile of its annual range, indicating low volatility expectations from options traders [4]

Core Viewpoint - Foot Locker is anticipated to report a quarterly loss of $0.05 per share, reflecting a significant decline of 122.7% year-over-year, with revenues expected to be $1.83 billion, down 2.8% from the previous year [1]. Group 1: Earnings Estimates and Revisions - Over the past 30 days, the consensus EPS estimate has been revised downward by 49%, indicating a significant reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate revisions and short-term stock performance [3]. Group 2: Sales and Store Metrics - Analysts estimate 'Total sales - Stores' to be $1.53 billion, representing an 18.2% decrease from the year-ago quarter [5]. - The 'Total sales - Direct-to-customers' is projected at $320.08 million, indicating no change from the prior year [5]. - The estimated number of 'Total owned stores (EOP)' is 2,465, down from 2,490 year-over-year [6]. - The number of 'Foot Locker Canada' stores is expected to be 82, a slight decrease from 84 in the previous year [6]. - The forecast for 'Number of stores - Kids Foot Locker' is 369, down from 385 year-over-year [7]. - The 'Number of stores - Foot Locker U.S.' is projected to be 668, compared to 711 in the same quarter last year [7]. - The estimate for 'Number of stores - Foot Locker Europe' is 603, down from 631 year-over-year [8]. Group 3: Gross Square Footage - Analysts predict 'Gross square footage - Total' to be 12,408.30 Ksq ft, down from 12,879 Ksq ft in the same quarter last year [6]. - The 'Gross square footage - Footaction' is expected to be 5.85 Ksq ft, compared to 6 Ksq ft in the same quarter last year [8]. - The forecast for 'Gross square footage - Kids Foot Locker' is 1,241.48 Ksq ft, down from 1,295 Ksq ft year-over-year [9]. - The consensus for 'Gross square footage - Champs Sports' is 2,299.98 Ksq ft, compared to 2,373 Ksq ft in the same quarter last year [9]. Group 4: Stock Performance - Foot Locker shares have increased by 102.1% over the past month, outperforming the Zacks S&P 500 composite, which moved up by 8.2% [9].

Company Overview - Foot Locker (FL) shares experienced a significant rally of 85.7% in the last trading session, closing at $23.90, driven by higher trading volume compared to typical sessions [1] - The stock has gained 15.7% over the past four weeks, largely influenced by DICK'S Sporting Goods' announcement to acquire the company [1] Earnings Expectations - Foot Locker is expected to report quarterly earnings of $0.01 per share, reflecting a year-over-year decline of 95.5% [2] - Revenue projections stand at $1.85 billion, which is a decrease of 1.3% from the same quarter last year [2] Earnings Estimate Revisions - The consensus EPS estimate for Foot Locker has been revised 2.3% higher in the last 30 days, indicating a positive trend that may lead to price appreciation [3] - Empirical research suggests a strong correlation between earnings estimate revisions and near-term stock price movements, highlighting the importance of monitoring Foot Locker's performance [2][3] Industry Context - Foot Locker operates within the Zacks Retail - Apparel and Shoes industry, where another competitor, Nordstrom (JWN), closed the last trading session at $24.54, down 0.2% [3] - Nordstrom's consensus EPS estimate for its upcoming report remains unchanged at -$0.11, which represents a year-over-year increase of 54.2% [4]

Core Viewpoint - The hypothetical scenario suggests that if Dick's Sporting Goods CEO Lauren Hobart were to waste $2.5 billion in cash, it would lead to a significant decline of 14.5% in DKS stock value, indicating the market's sensitivity to cash management and operational decisions [1]. Group 1 - The article highlights the importance of cash management for companies, particularly in retail, where operational efficiency can directly impact stock performance [1]. - It emphasizes the potential market reaction to significant financial missteps, illustrating how investor sentiment can be influenced by perceived wastefulness [1].