Goldman Sachs reinstated its rating on Dick’s Sporting Goods (DKS) at “Buy,” citing a “strong sporting goods industry backdrop,” strengthening vendor partnerships gained from its Foot Locker merger, and faith in Dick’s management team’s ability to revive Foot Locker’s growth.

“While Foot Locker has been an underperforming asset with lackluster comps and deteriorating margins, we expect Dick’s management can improve FL’s top line meaningfully as it manages its brand portfolio to include higher brand heat products, improve the store layout, and instill Dick’s service levels which should help drive conversion,” wrote Kate McShane, Goldman’s lead analyst in the apparel and footwear space, in a note. “We think improved top-line leverage and cost synergies could drive better margins at Foot Locker over the medium term, while the stand-alone Dick’s Sporting Goods business will continue to consolidate share with its strong merchandising, interactive stores and vertical brands.”

The investment firm set a price target of $274. Shares of Dick’s on September 23 were up $7.50, or 3.4 percent, to $226.74, in mid-afternoon trading. Goldman had suspended coverage as it served as financial advisor to Dick’s on the deal.

McShane cited seven reasons backing her “buy” recommendation:

  1. The macro environment is expected to support an increase in discretionary spending in 2026. McShane noted that Goldman recently updated its discretionary cash flow model, showing that the firm remains cautiously optimistic going into 2026. She said, “We expect to see an improvement in disposable personal income growth, which, coupled with the potential benefit from easing interest rates and moderating essential spending, should drive an improvement in discretionary cash inflow for consumers into next year.”
  2. The U.S. sporting goods business remains very healthy. McShane noted growth has “started to stabilize” following “dramatic” gains in the aftermath of the pandemic, with Euromonitor projecting global industry growth of 1.5 percent in 2025. McShane said, “We note that the sporting goods industry is still healthy and poised to grow, as Euromonitor forecasts a 2-3 percent growth rate from 2026 to 2029, in line with historical rates. PCE data and retail sales data also remain strong for current sporting goods trends, as Sporting Equipment PCE showcased a +4.1 percent growth in July 2025 and Sporting Goods/Hobby Retail Sales showcased a +1.1 percent growth in 2Q25.”
  3. Dick’s will improve Foot Locker’s offerings as a result of its strong vendor relationships and successful vertical brand offerings, likely driving share gains. McShane noted that Dick’s is “well-positioned to continue gaining market share given its differentiated product offering, improved in-store and online customer experience, and strength of its new concepts (i.e., House of Sport and Field House), along with the incremental share DKS is gaining through the acquisition of Foot Locker.” She noted that Nike launched its first connected partnership with Dick’s in 2021 and expects the program to extend to Foot Locker under Dick’s ownership. The connected partnership links Dick’s scorecard and Nike membership accounts, providing Dick’s members with exclusive Nike collections and experiences. She said this will help Foot Locker “benefit from more brand heat” and better compete against mall rival JD Sports, which is one of the few other retailers under Nike’s connected membership program. McShane also expects Foot Locker to benefit from Dick’s expertise in private label, which comprised 13 percent of Dick’s sales in 2024.
  4. Proprietary data show improving trends for both banners. Employing data from HundredX, Goldman found that Dick’s NPS (Net Promoter Score) has been on an increasing trend over the past three years, currently at 33.7, above its three-year average of 30.6. Foot Locker’s NPS has increased recently, standing at 31.4, above its three-year average of 25.0. Foot Locker outperforms Dick’s with consumers spending $50,000 to $100,000, while Dick’s outperforms with customers spending over $100,000. Among key drivers, Foot Locker rates higher than Dick’s on price, while Dick’s continues to outperform in selection, brands and quality.
  5. Dick’s continues to grow its profitable Game Changer business. Expanding across youth sports, the Game Changer app offers videos of kids’ games, statistics, and performance highlights, and is growing at a rate of 30 percent to 40 percent annually, with an expected $100 million in sales by 2025. McShane said, “DKS has stated that Game Changer is highly profitable and at the right level where it is a significant contributor to the overall company.” The analyst also expects digital advertising dollars to “likely continue to shift to retail from search” to support incremental growth for Dick’s similarly high-margin retail media network business.”
  6. The deal is resulting in a “fairly clean balance sheet which could pave the way for share buyback.” Dick’s repurchased $298.7 million of its shares in the first quarter, has $212.9 million remaining under its December 2021 share repurchase program, and its board in early March authorized an additional five-year share repurchase program of up to $3.0 billion. McShane said, “Going forward, DKS management plans to continue to be opportunistic in terms of share buybacks.”
  7. Valuation indicates stock upside. McShane noted that as of September 5, 2025 (merger with Foot Locker closed on September 8, 2025), DKS was trading at 14.8x NTM (next-twelve months) P/E versus its 3-year/5-year average of 12.5x and 12.4x, respectively; while FL was trading at 23.6x NTM P/E, vs. its 3-year/5-year average of 13.2x/11.6x.

Image courtesy Dick’s Sporting Goods