Foot Locker just changed the face of the sneaker resale market.
With a $100 million investment in GOAT Group, the organization behind sneaker resale marketplaces GOAT and Flight Club, Foot Locker has put its own stamp on the sneaker resale industry and provided GOAT with the necessary funds to become a leader in a growing market.
Foot Locker’s investment more than doubles GOAT’s current funding, which has now reached a total of $197.6 million, according to Crunchbase. It also puts GOAT well ahead of its rival resale platform, Stockx, which has just $50 million in outside investment.
Kurt Badenhausen, senior editor at Forbes, tweeted Thursday after the news broke, “Foot Locker Investment values GOAT Group at more than $550 million, per sources.” If confirmed, this would mean GOAT has more than doubled in value since it merged with Flight Club last year, according to Recode data, a remarkable feat considering just two and a half years ago, GOAT celebrated reaching $5 million in funding for the platform. When Farfetch purchased Stadium Goods in December, it was purchased for $250 million, less than half of GOAT’s speculative valuation.
Overall, Foot Locker’s investment lends more credence to the idea that the sneaker resale market is currently worth more than $2 billion.
As far as how the partnership is expected to play out, the organizations say they will “combine efforts across digital and physical retail platforms” to create an “exclusive customer experience” that will elevate overall consumer engagement. Foot Locker will also help to accelerate GOAT Group’s omnichannel offerings and provide support for the development of new technologies in the marketplace.
“We are excited to leverage GOAT Group’s technology to further innovate the sneaker buying experience and utilize their best-in-class online marketplace to help meet the ever-growing global demand for the latest product,” Richard Johnson, Foot Locker chairman and CEO said in a statement.
Related Stories
For GOAT Group, the value in the partnership lies in Foot Locker’s well-established retail operation and its clout with sneaker consumers—a valuable asset in a business that relies so heavily on consumer trust to be successful. Sneaker resale companies like GOAT’s own acquisition, Flight Club, and its resale rival, Stadium Goods, started as physical retail locations but neither had access to a worldwide retail network like Foot Locker’s.
“In 2015, we pioneered the ship-to-verify model with a mission to bring a seamless and safe customer experience to the secondary sneaker market,” Eddy Lu, co-founder and CEO of GOAT Group said. “With over 3,000 retail locations, Foot Locker will support our primarily digital presence with physical access points worldwide, bringing more value to our community of buyers and sellers.”
Lu also suggested the partnership would help grow the company’s global footprint, a suggestion given further weight after Foot Locker’s announcement Wednesday that it was reorganizing its corporate structure to further expand into Asia. The New York City-based company announced it had split its operations into three distinct geographical regions—EMEA, APAC and North America—to “better align its resources across its international businesses and to develop an infrastructure to support an expansion plan within the Asian market.”
Both the investment and the structural change came after a period of spending that has seen the footwear chain invest in both startups like GOAT and Super Heroic along with a renewed focus in community engagement—evidenced by investments like the $2 million it gave Pensole Footwear Design Academy in January. Foot Locker has also announced its plans to begin building “Power Stores” in major North American cities after successful rollouts in London, Liverpool and Hong Kong. These locations are larger and more specialized to their areas and are designed to give the retailer a foothold in communities, becoming a sort of local sneaker hub for area shoppers.
Foot Locker began to drop clues that it intended to ramp up investment in November of last year. Citing a strong balance sheet during Foot Locker’s Q3 earnings report, Lauren Peters, executive VP and CFO of Foot Locker, suggested that Foot Locker had been granted the “flexibility to continue investing in the business for the long term, while returning cash to our shareholders.”
The company will announce Q4 earnings on Mar. 1.