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Keith: PSS looking to breakout again from its TRADE line 13.99.

Brian

  • The consensus is off by a buck next year – no kidding.
  • PSS was investing in SG&A and PP&E while comps were down, product costs were heading up, and cost of capital was turning unfavorably.
  • 96% China exposure is Big. Yes it hurt while costs were rising, but we’re going the other way as capacity opens up again in China.
  • Leverage is still a concern. I don’t like it one bit. But comps are stabilizing, and both FOB and rent is coming down dramatically.
  • On a flat comp, these 2 items result in $0.55 in EPS over 12 months.
  • I buy into the ‘white space’ argument, meaning that the company can take up ASP to the high teens as it improves product mix.  Opportunities at Sperry and Saucony are gravy.
  • Tough to find a company with this much earnings upside.