Fundamentally, I’m not comfortable with TBL here. I think ’09 es are high by 50%. Keith’s models suggest an 8-handle if I am close to right. If I’m off fundamentally, watch the 11.24 shark line.

Brian: I’m not thrilled w TBL right now. TBL’s share appears stable, and price points are relatively healthy. But TBL has had 3 quarters in a row where it meaningfully improved both its sales/inventory ratio as well as margins due to its efforts to close unprofitable stores and license out its apparel business. FX has been a 2-3% tailwind in the past 4 quarters, and that goes to -4% in 4Q and stays negative at current rates for the bulk on 2009. Also, with 45% of sales in Europe in 10% in Asia, TBL is disproportionately affected by declining consumer trends outside of the US. I like the long-term call that TBL has proactively invested in its own business over the past 3 years to make up for sins of the past and gain share in the new consumer landscape. But it simply cannot move as quickly as the current environment requires.

For the quarter, I’m at $0.25 vs. the Street at $0.29. The Street is looking for a down '09 -- $0.70 vs. $0.80 in '08. That’s not conservative enough. I’m at $0.45. Do I like the balance sheet? Yes. Do I think that either Nike or VFC ill own this name over 1-2 years? Yes. But I don’t know how much of that will matter right no if earnings come down by a third. On my numbers, this name is pushing 7x EBITDA. I need to be really wrong on the fundamentals in order to make this name reasonably cheap relative to peers.

Keith: TBL is broken and needs to take a good hard look at breaking $10 again… if it breaks 10.21, the 8 handle is in play… this one could see a massive squeeze however if it can find a reason to close above 11.24 and hold its gains.

[I know, the 'margin walk' below is tough to read -- even when enlarged. Check out the larger image in the pdf, or simply shoot me an email.]