There are better shorts out there than UA. But longs need to see REAL growth acceleration (not channel stuff). That’s not likely…yet.
There’s a lot of bad news baked into UA expectations after the guidance last quarter – that’s obvious with the stock losing a third of its’ cap ytd.
- The point to be wary of is UA guided before Gander Mountain filed for bankruptcy, perhaps that could mean even more downside.
- It also printed before Academy (close to 10% of UA men’s apparel sales by my estimate) felt material pain – or at least communicated it in full to vendors.
- Since the print, UA did a footwear deal with DSW. Let me get this straight, UA occupies at best 10 slots on a 550-shoe footwear wall at FL, and it goes into DSW for a wholesale deal? That’s after doing an apparel deal w KSS? For the life of me, I do not understand...this is simply very poor quality growth.
- Maybe I’m oversimplifying this…but if I’m a growth manager, I need to see the top line accelerate, and am probably looking to see high quality growth. By high quality I mean ‘Consumer pull’ instead of ‘company push’. I have a very hard time modeling that this quarter.
- I could go through the whole “if I’m a value manager” shtick…but let’s face it, no value manager will touch UA with a 20-foot pole without severe style-morph.
- UA has a balance sheet, but no CFO. It needs $600mm in cash to invest to fix the brand, but now has a Junk credit rating.
Is it the best short out there? Not by a long shot. This is a great brand, and could very well evolve into a great company. Plank won’t fail. But he’ll have to spend up (more than UA’s balance sheet can comfortably afford) while he tries. I stikll think UA does a deal at a lower price.
