Here’s my ‘stream of consciousness in listening to the UnderArmour call’. All comments are in answer to management comments...
- Plank starting the call overly confindent. Selling the story w/o humility is horrible.
- 5-year CAGRs are irrelevant today Kevin.
- UA should not be putting up a similar top line growth as Nike – that is 8x the size.
- Plank did not eat humble pie. That means he’s going hungry for a while til he can serve dinner.
- Focusing on Premium distro? Then how you explain KSS? Full price selling at KSS? Good luck. Could this be KSS/JCP bullish?
- Growth story not in-tact when growth decelerates by half. Sorry UA.
- You have a white board in your office Kev-o? Guess what…we do too.
- Why did Malloy even get on this call? He sounded really miffed and got no airtime. Maybe the demand for shirts is harder to forecast than the demand for goldfish – or shooting down a mig.
- Interim CFO made the most sense. $5bn infrastructure invested for $10bn company. But then why sales slowing?
- WOW! Company is ‘evaluating’ capex? Streamlining?
- Sorry guys, but you DON’T take down Capex when you whiff. You do the opposite. This is a BIG multiple deflator as it calls into question intermediate and long-term growth.
- Connected only grew 8%? Isn’t this a growth focus? It loses money – maybe the slowdown is margin bullish.
- Plank is one of those CEOs that is a TREMENDOUS internal force. That works, until people are too afraid to take risk. He manages by fear…has made people cry in management meetings (that’s well known publicly). Again, that gets very effective results. until it doesn’t.
- This sounds like Nike saturation 25-years ago. But really arrogant.
- We’ll prob see half a dozen downgrades – the irony is that it’s prob not a capitulation.
- Plank "This is not just a growth story." Huh? The multiple thinks you are.
- "We're paid to see around every corner." But you failed twice in a row.
THOUGHTS FROM EARLIER THIS MORNING
Where’s the irony when UA blows up for the second time in 90 days – over the same exact time that Coach beats twice?
The brand is not broken, but the stock is just as broken as RH was last year.
Maybe it was the ticker change? $UA $UAA?
I gotta hand it to UA tho…it did an artful job keeping this disaster quiet. Usually quite difficult for any company to keep the worst revenue miss EVER – and lowest sales growth in eight years – outside of the chitter chatter of the investment community.
But…that makes it no less horrific. The simple fact is this…When UA (sorry, I will always call it UA, not UAA) hired Chip Molloy as CFO, it not only upgraded the person IN the CFO role, but it upgraded the entire ROLE of CFO.
That was such a big positive, until it wasn’t.
- I don’t care what a press release says, but a decorated Top Gun pilot/Naval Academy rock star turned ‘never miss a quarter’ CFO at PetSmart simply does not retire from a job he started 13 months ago ‘for personal reasons.’
- If we’re talking a career accountant that worked his way up through middle management and never had a front-facing CFO hat, then maybe I ‘get it’. But guys with Malloy’s background simply don’t leave because ‘things are tough’. It’s not in his DNA. Sorry.
- A guy like him will leave either because he has finally found a boss who is completely untenable to work for.
- When things get tough, that’s when you really see what your teammates are made of – not in a softball interview phase.
- Why is it that when things get tough, Plank either fires everyone that comes near him, or they leave?
- I would not be surprised if we see Plank step down over 12-24 months and hand the reigns over to someone that can build and sustain the HR side of the organization as well as he has done for the Brand side.
- When a brand is just about done going through puberty, that kind of stuff matters.
Investment processes should not even know how to spell the word ‘regret’. But I fully regret not being outright short this name. I got caught up in the ‘Malloy lowered the bar last quarter and probably won’t miss again’ short-avoidance. But now, it will have to be a value stock before it’s worth buying – and we’re not even close. Even after the pre-market sell off, we’re still probably 20-30% away from considering this a ‘value’. AND we all know that once an uber-growth stock becomes a ‘Value’ it almost never gets the growth multiple back again.
