Foot Locker, Inc. on Friday put an end to rumors about a sale of the company and even hinted that they had been in the hunt for a few acquisitions themselves. Speculation of the sale of the world’s-largest-athletic-specialty-retailer to a private equity firm were never really substantiated and were generally covered by only one journalist in an apparel business trade publication. The magazine published a number of stories about a pending deal “within weeks” and then “within days” that never materialized. SEW found it curious that no other business trade publications, even those dedicated to the footwear business, were able to substantiate the story. The “unnamed sources close to the deal” became the author’s Deep Throat in the continued hyping of the story.

The speculation of a sale really started to unravel last week when Foot Locker, Inc. unveiled plans to raise its dividend by 39% to 12.5 cents a quarter, or 50 cents a year. SEW, along with many analysts covering the sector, immediately saw the move as running counter to any idea of selling the company since it would clearly reduce the forward cash position that many found so compelling in any potential deal.

At the end of the day, the retailer has decided to invest in the expansion of its current business and the creation of two new banners (see story page 3) and company Chairman and CEO Matt Serra put the rumors of a sale to rest during the retailer’s quarterly conference call with analysts. “There are no discussions taking place nor have there been,” said Mr. Serra during the call. He indicated they had hired Evercore Partners to advise them on a “range of matters,” but also indicated they had hired the Parthenon Group as a strategic consulting firm to assist them in reviewing their business plan. Mr. Serra said they planned to continue to use both firms as needed.


>>> The company had little reason to squelch the sale story prior to last week as the rumors kept the company’s shares elevated. The revelation that the company will roll out a new family footwear value retail format and a new headwear retail format now clearly signals that the retailer does not plan to maintain the status quo and stay focused exclusively on its business in the mall. They are taking steps to expand beyond white athletic footwear and into categories that are delivering solid results for many other retailers these days.