Yeh, I know, the overwhelming sentiment coming out of the channel is bearish on UA. I get it. But let me throw out a few nuggets…
1) UA just gained share for the 5-the week in a row at an accelerating rate – per SporscanINFO (+96bps, 101, 161, 189 and 213 for each of the 5 weeks ending this past Sunday).
2) Footwear sales continue to track in line with my expectations.
a. Average selling price trends for UA running footwear actually increased in the latest week from $90.8 to $92.5.
b. In fact, Foot Locker just added to that on its call by saying…
i. “In an effort to reinvigorate the domestic apparel segment, FL will be increasing offerings from UA by increasing the number of doors from ~800 to ~1300.”
ii. When asked how the running launch for UA has performed, response was that it “was off to a very good start.”
iii. Also working closely with FL to sell into Europe.
Granted, I have yet to hear any retailer ever bash one of its major vendors. The outcome if that were to be the case would be ugly to say the least. But the numbers and checks I have support what Foot Locker is saying.
My call on this continues to be that it is a company that should double in size over 3 years as it takes advantage of the consumer’s appetite for UA to succeed in footwear. I can’t find any other company that will grow to the same magnitude (except maybe Lululemon). My biggest worry at this point is that it is a ‘tweener.’ It is nowhere near cheap enough for a value investor at 15x EPS, but no growth manager will touch it until the top line starts to accelerate more meaningfully without sacrificing margins. I think that will be a 1H event.
1) UA just gained share for the 5-the week in a row at an accelerating rate – per SporscanINFO (+96bps, 101, 161, 189 and 213 for each of the 5 weeks ending this past Sunday).
2) Footwear sales continue to track in line with my expectations.
a. Average selling price trends for UA running footwear actually increased in the latest week from $90.8 to $92.5.
b. In fact, Foot Locker just added to that on its call by saying…
i. “In an effort to reinvigorate the domestic apparel segment, FL will be increasing offerings from UA by increasing the number of doors from ~800 to ~1300.”
ii. When asked how the running launch for UA has performed, response was that it “was off to a very good start.”
iii. Also working closely with FL to sell into Europe.
Granted, I have yet to hear any retailer ever bash one of its major vendors. The outcome if that were to be the case would be ugly to say the least. But the numbers and checks I have support what Foot Locker is saying.
My call on this continues to be that it is a company that should double in size over 3 years as it takes advantage of the consumer’s appetite for UA to succeed in footwear. I can’t find any other company that will grow to the same magnitude (except maybe Lululemon). My biggest worry at this point is that it is a ‘tweener.’ It is nowhere near cheap enough for a value investor at 15x EPS, but no growth manager will touch it until the top line starts to accelerate more meaningfully without sacrificing margins. I think that will be a 1H event.
Apparel Share Gains Are Accelerating
