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Channel data supports our above-consensus view on FL. We like NKE better at this point, and Nike’s numbers continue to crush the competition. Adidas and Reebok are holding their own. The smaller guys are flat-out losing.

 

Let’s take a glimpse into channel footwear data in advance of FL’s print.  When all is said and done, we are at $0.17 for FL on a comp assumption of +9.5% for the quarter headed into Thursday’s print, which is ahead of the Street at $0.12 and 8.1%, respectively. Is FL one of our favorite names? Not anymore. But we still believe that those who think that the recent strength is over will miss much of this turnaround story. A name like this that has been (justifiably) out of favor for the better part of 20 years, will show more than just a few quarters of upside as the management team makes up for the sins of old.

 

 

Here are some additional highlights:

 

  • The 1.8% increase in Athletic Specialty sales round out the Fiscal quarter for FL with consolidated Athletic specialty sales up 7.2% for the 3 month period.
  • Although all three channels saw sequential deceleration, Athletic specialty/SG outperformed the Department & National Chain store channel and Shoe Chain channel with sales growing 1.8% vs. (14.8%) and (3.4%) respectively. The gap between athletic specialty and the department stores sales growth actually grew from 15.5 points to 16.6 points in July while the gap between athletic specialty and shoe chain shrunk from an ~11 point difference down to a ~5% spread.
  • While industry ASP growth was essentially flat, ASPs were down 6.4% in the Department store channel and down slightly in the shoe chain channel suggesting increased promotional activity while athletic specialty is closer to full price sell through. While still positive, we’re not particularly thrilled with the trendline ASP for the industry. Let’s keep an eye on that one.
  • Nike continues to post outstanding market share growth. But in fairness, this represents Retail sales – and Nike NEEDS outstanding share gains to fuel its recent futures growth.
  • Puma, New Balance & Skechers saw another month of sales declining year over year; down 28.4%, 11.4% & 49.8% respectively conceding more share to Nike, Brand Jordan, Adidas & Reebok.
  • Reebok continued its growth in sales, ASP & marketshare for the third month in a row with Sales up 49.8% on 8.4% ASP growth to the tune of 170 bps in market share.
  • UnderArmour is still not showing up for practice.

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