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FL/UA: Get ‘Em While They’re Hot

Online sales of UA basketball shoes are going strong, and core sizes are out at FL.com. But don’t mistake that for a bullish call on UA. FL is the play here.

If you want to get your UA Basketball shoes through Foot Locker, you’d better hurry up unless you’re a size ‘Sasquatch.’  Core sizes in the flagship product are scarcely available online since the launch on Saturday, October 23rd. This plays into our view that the retailers – espec FL – will benefit from a better capitalized R&D cycle as well as greater capital deployment by the brands into sports marketing assets. Did anyone see the line up of commercials during last night’s NBA opener?

We’re very bullish on UA’s footwear business, but as noted yesterday, we do not like the stock near-term as two new risks (endorsement spending and cotton procurement) led us to take down our 2011 estimate by $0.14 to $1.56 at the same time the Street came up to near $1.50. That’s a far cry from the $0.60 gap that existed when we liked the stock $30 ago.

FL is the play here.

FL/UA: Get ‘Em While They’re Hot - UA2