I’m surprised the stock isn’t down more.
The weak growth algorithm and revenue-starved guide is enough to get this stock down double digits, but the DOJ/SEC investigation is the icing on the cake. Bulls will come out and say ‘it’s been going on for 2.5 years so it’s not a big deal.’
Sorry folks, but this is a criminal investigation that sounds to me like there could be a whistleblower case by one of the many former high profile employees – it is a very big deal.
The DOJ can subpoena former employees directly, while the SEC has limitations. The DOJ’s involvement indicates a higher level investigative powers and severity of possible punishment. Don’t play down their involvement here. If you were wondering why Kevin is stepping back from the CEO role, now you know. He even stated it on the conference call…that he didn’t want to be bogged down by administrative and HR issues, but rather wants to be focused on the brand.
Sounds to me like the WSJ caught wind of the probe a few weeks back, and Plank knew there would be a firestorm, so the logical move was to proactively transition out of the CEO role. All I know is that with the stock down only 13%, either the probe or the quality of the growth trajectory (footwear down 12%, Asia Pac only +4%, NA down 4%, continued sluggish DTC growth) is getting a free pass.
This stock should be lower.