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Dicks Sporting Goods buying Foot Locker for $2.4 billion dollars. The company looks to expand its international presence. Foot Locker is expected to operate as a standalone business unit and keep its brands. Dicks financing the deal with cash and new debt. Joining us now, Arun Sundaram, CFRA Research, Senior Equity Research Analyst. Arun, great to speak with you. Talk to me about what your take is on this deal for both Dicks and Foot Locker. What do you think of it?

Yeah, I mean, certainly for Foot Locker shareholders, it's a good day. The stock is up about 85%. Uh, you know, Foot Locker, uh, as many know, has been struggling for quite some time now, especially recently with all the tariff risks uh, going on, but uh, Dicks on the other hand has been performing really well and executing pretty well as well. Um, I think this acquisition um, helps Dicks in a few ways. One, there's differences in demographic customer demographic bases. Dicks' customers tend to skew more middle to a little higher income. Foot Locker maybe a little bit more of that lower to middle income households. So it does broaden their reach there. Um, it also helps Dicks expand internationally. Foot Locker has an international presence. But I think first and foremost, this is going to help Foot Locker uh, compete better in this new digital era. Uh, Dicks has been executing and doing really well in e-commerce, uh, whereas Foot Locker hasn't. And I think this, um, uh, uh, Dicks can help Foot Locker really uh, grow and expand its presence in the e-commerce space.

Any regulatory concern here?

Uh, we don't see much regulatory issues here. There's there's not much overlap in terms of the the uh, even the store locations, for example, Foot Locker more mall-based and and uh, Dicks is more standalone and even the categories and goods that they sell, it is uh, diversified.

Arun, my guest host, Tim, has a question for you as well.

Arun, when when you look at the health of the consumer, I know you know, there's been a lot of focus here over the last several months on tariffs and the impact that's going to have. I want to talk a little bit about the tax bill that you saw introduced from the house uh, just a couple days ago. What impact do you see this having on retailers? Um, you know, you look at especially, you know, some of the tax breaks proposed uh, for those making under $160,000 a year. Does this really help propel and start getting going that lower end consumer that's been struggling over the last few years?

Yeah, certainly, I think right now the lower end consumer uh, really needs to see some relief, especially given now, you know, uh, high inflation risk given all the tariffs. But certainly, I think any any uh, policy relief will be welcomed by retailers and consumers. Um, especially the retailers that do compete on more of the lower income side. I cover a lot of dollar stores and these dollar stores have been struggling for a number of years now. Um, for companies like Walmart, for example, they do, you know, skew a little bit more to the lower income, but they've also been getting a lot of higher income households, which has been helping offset some of this pressure, but yeah, certainly I think any tax relief will be welcomed by by these retailers.

And who do you see really as the biggest beneficiary from a lot of those tax cuts? Is it is it really the catalyst to spur that, you know, lower end, the Dollar General, the Walmarts of the world forward? Um, what do you see there?

Yeah, I think most retailers will benefit from from any policy relief, even if inflation um, or tariffs come down even more, but right now, you know, in our view, uh, we really see three retailers best positioned to navigate through the rest of this year. That's Walmart, and that's Amazon, and that's Costco. Those three retailers uh, we see are gaining a significant amount of market share, and we see that continuing uh, through the course of this year.

Arun, thank you so much. Really appreciate you making the time for us.

Thank you.