Takeaway: I say this with a healthy dose of egg on my face, but I’m doubling down on TPR on this sell off.

I don’t know who’s credibility is blown up more, mine or the company’s. There’s no way to sugar coat this quarter. EPS in line, but got there the sloppy way. Coach brand and Stuart Weitzman – check. Increased share repo – check – but not enough. Abandoning acquisition strategy while it focuses on core – check. Inventories up 15% -- problem for 1Q gross margins. Kate Spade – problem. Weak traffic in North America pressuring comp with no other good explanation. Guidance – flat next year -- though we’d be upset if it hung on to stretch targets which would keep the multiple under pressure. When we did our Bottom Fishing/Model Stress Test Black Book two weeks ago, we ‘recessionized’ the TPR model and came up with a trough price of $22.20 – a level we blew through in the first minutes of trading. I have egg on my face for riding this stock all the way down from the high $30s. My worst call in years. But I’m not going to capitulate and drop support at what I think is the tail end of a bottoming process just because I failed to get out before Quad 4 and China scares. But we clearly have to bank on a reacceleration in KATE comps as the year progresses. The company can talk all day about how it’s pleased with Nicola Glass’ strategic vision, but the reality is that her stuff ain’t selling, and that’s a problem. The licensing optionality here is huge – with 24 licenses left to be renegotiated/rebundled/extended or taken in house. We’re starting to see it in KATE’s revenue growth (non-comp sales) but we’re in the 3rd or 4th inning there. Management made a big mistake in giving the early soft 2020 double digit EPS growth guide a few quarters ago. It set an overly high bar, which it just reiterated in May. The CEO has lost his credibility now, and if we wants to give investors some confidence in the plan and guidance, he might have to put some money where his mouth is and buy some stock, or at a minimum deliver 3 or 4 quarters of no mistakes/surprises in the trajectory of the brands’ fundamentals. If this company believes it can dig itself out of a hole – as I do -- it should be levering up 2x, cutting the dividend (now at 6.7% yield) and buy back half the float. Activists have to be considering that opportunity at this kind of price. The fact that this company has the same EBITDA multiple as Macy’s is absolutely ridiculous. Its issues are transitory, not structural. It’s tough for any of us to buy into a name on a rocky quarter in a Quad 4 tape. But I’m not walking away from this one at peak carnage/pessimism. I think both the earnings power and sentiment looks dramatically different for this name within 6-12 months, with minimal downside from here.