U.S. Markets open in 6 hrs 24 mins
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Footlocker’s new acquisitions, Goldman Sachs raises wages, U.S. women’s soccer team eliminated

In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Myles Udland and Brian Sozzi break down Monday’s business headlines, including: Goldman Sachs raising wages for junior positions after complaints of burnout from employees, Italy’s Lamont Marcell Jacobs winning gold in the 100-meter dash, Xander Schauffele notching gold in golf, the U.S women’s soccer team eliminated at the Olympics, and Foot Locker pushing expansion efforts with the more than $1 billion acquisition of Atmos and WSS.

Video Transcript

MYLES UDLAND: All right, let's take a look now at some of today's other top business headlines. The Wall Street race to keep junior bankers happy continues. Goldman Sachs now announcing it will boost pay for analysts and associates, the two most junior roles at the bank, that according to multiple reports. Goldman's move follows base pay increases for junior staff at Morgan Stanley. JPMorgan, Citi, and others already announcing those moves this year.

And it was a busy weekend at the Olympic Games, the highlight coming on Sunday morning Eastern time. Italian Lamont Marcell Jacobs claimed a shocking victory in the men's 100-meter dash, claiming the title of the world's fastest man. Jacob set personal records in all three rounds of competition in Tokyo, winning Sunday's final in a time of 9.8 seconds. And Jacobs is the first European to win the men's 100-meter dash since Linford Christie of Great Britain won the title at the Barcelona games back in 1992. And in other Olympic news, American Xander Schauffele won the men's golf competition. American Jade Carey took gold in the women's floor exercise, while the US Women's soccer team eliminated earlier this morning by Canada in the semifinals of that tournament.

We talked earlier in the program about Square's merger Monday. Well, it's also a merger Monday in the retail business, Foot Locker saying it will buy two smaller retailers, WSS for $750 million and Atmos was for $360 million. More than $1 billion in acquisition comes as Foot Locker tries to broaden its physical store base. Now, WSS operates about 90 stores located on the West Coast and Southwest. They are largely outside of malls where, of course, we all know Foot Locker predominates. And Atmos has 49 locations, the majority of which are in Japan.

Sozzi, notable to see a company beefing up its physical footprint. I mean, it's been the death of the mall now for a long time. Foot Locker is certainly at the intersection of that trend. You've also got the sneaker reselling trend. What do you kind of think they're after with this deal?

BRIAN SOZZI: Very clever deals here by Foot Locker CEO Richard Johnson, a true retail veteran. I'm not surprised that he went out and made some of these deals. I'm also-- really chief, because of these reasons, they had $2 billion in cash exiting in the most recent quarter, and a lot of folks on the Street were wondering, how are they going to put that cash to work? I would suspect not a lot of them-- not a lot of folks on the Street saw these types of deals coming here. What they did probably see is Foot Locker trying to make a deal for GOAT, or the sneaker reseller they took a stake in in 2019. But that price might be a little prohibitive.

Let's remember here that GOAT in June raised $195 million, which more than doubled its valuation, close to $4 billion here. So that price might be a little steep. But ultimately, you have Foot Locker here sitting on a large paper gain in GOAT, $2 billion in cash on the balance sheet. So why not put some of that cash to work here and try to grow the brand?

MYLES UDLAND: And you know, look, different growth profiles, the valuations are really not comparable in some ways. But $6 billion, give or take, market cap on Foot Locker, you mentioned GOAT with its latest capital raise, basically valued at what 2/3 of what Foot Locker is. I mean, would there even be a possibility-- and you mentioned they realized the paper gain on that investment, would there ever be a possibility that those two companies could come together, or do the GOATs and the StockX's-- are they charting their own path kind of through the next phase of retail and, you know, Foot Locker can make these moves around the edges? But them acquiring one of those businesses, does that seem out of reach to you?

BRIAN SOZZI: I think the sneaker resellers are inclined to see how much further they could push these valuations besides-- either before they decide to go public or selling out to another company. But I do want to mention here on that Foot Locker valuation, I think the stock continues to be trading at a discount to the broader market here because it continues to get penalized for having a lot of stores, thousands of stores in malls across the globe. But analysts need to realize here, they have the opportunity to close hundreds of underperforming stores over the next few years. That will free up a lot of the expenses on the income statement and probably lead to some better earnings.

MYLES UDLAND: And Brian Sozzi, there is no one who loves closing stores more than you. The store reaper, I guess you could say.

BRIAN SOZZI: Got to drive those earnings, baby.

MYLES UDLAND: We went through it with GAP. We talked about it with L Brands for years. And now Foot Locker gets to be in the driver's seat in terms of closing locations.

BRIAN SOZZI: Fair enough.

MYLES UDLAND: All right.