With the HBI print coming on Thursday, we decided to hit on our key thoughts via a Q/A session with Brian and Jeremy. Video can be viewed below:
Questions we hit on:
1. Isn’t the bear case played out at this point? The stock has re-based in the low/mid teens, and it’s cheap. It seems like another shoe has to drop to make money here short side. How would you push back on that?
2. What does your model say about the fourth quarter? How is company likely to guide? Could a low/realistic guide for 2019 make this stock start to work again – bc numbers will actually be believable?
3. What are the decremental margins associated with C9? Can’t this business find another home elsewhere?
4. What is causing Innerwear pressure? Where are the upper and lower limits on innerwear growth? How much do you think the consensus has this right/wrong?
5. Innerwear has been the crux of the bear thesis, but its now down to about a third of total. What are the other key levers to the P&L/cash flow that we should be focused on?
6. Can Champion grow enough to hit numbers?
7. Can the company kick the can down the road with more acquisitions that can manufacture cash flow?
For the Video Replay and slides of our January Black Book on HBI: CLICK HERE
