Yes, this print (in a seasonally less relevant quarter) was 'better than expectations'. But the rate of change in revenues declined by 20 points -- not basis points -- but points. From +21% to +1%. But what shellacked the stock today is the dynamics behind the guide. We said in our Sunday note that this company would be lucky to earn half of the $1.40 consensus for 3Q (Dec), which is a HUGELY important quarter for GOOS. Lo and behold, it took down the bottom end of guidance for the year to $0.60 from $1.20 -- but here's the kicker...the company kept the high end of the range intact. So the year is forecasted to be $0.60-$1.40, which is simply a massive range. Almost Amazon-esque. But let's face it, AMZN can pull that off -- but a dying brand like GOOS can't. The reality is that management does not have a clue. They know they have a huge brand problem, and are sitting on over $2.3bn in retail-value inventory, and finally fessed up this quarter that wholesalers are cutting distribution -- something we've been talking about for a while. Wholesale was down 18% in the quarter, due to “planned streamlining” (which is laughable -- we call it order cuts) and cautious buys by wholesalers, despite also seeing early deliveries in Q2; which doesn’t bode well for Q3 wholesale if orders were pulled forward slightly. North America was down 11% in the quarter, a big deceleration from +7% in Q1; with Canada decelerating from +6% to -1% and the US from +1% to -10%. EMEA decelerated from -1% to -3%. Trends in APAC didn’t look as bad, only going from +7% to +6%. All on a constant currency basis. While the company’s DTC business is still up YY, it slowed in the quarter +15% from +21%. The company opened six new stores in the quarter and expects a total of 15 new stores for the full year. They booted the CFO and relegated him to be the President of APAC. Big demotion there. CEO Danny Reiss should demote himself, as he's egregiously mismanaged this brand. Ultimately, this company has $0.50 in earnings power -- maybe less -- and deserves no more than a 10x multiple. We went short this name at $30, and it traded down 10% on this print. We still think it gets cut in half from here. If you're tempted to cover -- resist it. See Elevator Pitch and SIGMA analysis below.
