Consumer/Retail focus (free man after 15 yrs penance LEH, BARC, RJF). 2nd life Entrepreneur. Hobby talking shop. Substack free. Enjoy real debate. DM's open.
Nov 17 • 8 tweets • 13 min read
(1) Circling back to $UAA after percolating on 2Q25 earnings. The hot topic these days is which is the better turnaround story, $NKE or $LULU? Well, what if it’s Under Armour instead – the name has been overlooked for a long time now. Thread:
(2) PRODUCT AND TIMELINE
Key Takeaway: Never seen a better illustrated $UAA story, with company taking risk to admit there will be proofs of life along the way.
Last quarter (1Q25), Under Armour went on record to say that Fall/Winter 2025 is when the product inflection should occur. We heard this story once before during the Patrik Frisk era. What makes Under Armour interesting today is that Kevin Plank explicitly said there will be “proofs of life” beforehand.
Under Armour’s standard go-to-market calendar is 18-months, but it appears they have recently added a 9-month speed-to-market capability. I remain a bit confused by what Patrik Frisk did at the company, because speed to market was the main narrative back in 2019-2020. Of course, back then, they apparently went from a 22-month calendar to a 17-month calendar. What makes this confusing is Kevin is on record back in 2Q14 saying they had an 18-month product calendar! For those keeping score, we started at 18, went to 22, dropped to 17, and now we are back at 18, but with 9-month capabilities too.
John Varvatos joined the company as Chief Design Officer on 9/11/23. The StealthForm hat launched in April 2024 and is the first product to use the new 9-month speed capability. Probably a bit too early to initially come from Varvatos but he likely got to experience what that capability can do, so not hard to imagine an acceleration in relevant product from Under Armour going forward.
But the larger opportunity almost certainly will align with the 18-month calendar. Varvatos was on the job for ~6 months before he had to start planning for the Fall 2025 inflection. That should be more than enough time to get acclimated and lends credibility to Kevin’s statements that we should see “several proofs of life” beforehand, including some product drops in early CY2025.
By the sound of it, we should be on the lookout for any changes in “men’s apparel and footwear as well as evolution in style and innovation”. Style should be the easiest difference to spot as there hasn't been much of that at Under Armour in recent years (outside of Project Rock), and that should be in Varvatos’ wheelhouse. Also it sounds like we should be looking at better and best distribution - likely $DKS and $JWN for apparel and $FL for footwear (in particular Infinite running which seems to have a fairly good SKU presentation today and all at full price). They also called out an update for SlipSpeed in early next year.
Lastly, I remain highly encouraged that Under Armour is putting their best designers on lower ASP but higher volume footwear product. I can’t imagine $NKE is planning to build back its running business by focusing on this price point first.
Sep 15 • 11 tweets • 9 min read
(1) As promised, here are my updated thoughts on $RH after taking some time to think through all the new information that came out of 2Q24 earnings last week. This will be a somewhat long thread:
(2) The biggest question to the story today is new product performance. Approximately 35%-40% of the galleries have all the right goods. That feels about right to me.
The 24% y/y inventory build as of 8/3/24 also indicates that $RH most likely has a lot of new product in its mix today. So somewhat surprising that customer deposits remained down the same 8% as 1Q24. It is also somewhat confusing why they would need to draw down $85 mm on the ABL in ~August (more on that later) if that 24% inventory build was selling as well as Gary alleges.
I harp on customer deposits because here is what happened when the company launched $RH Modern for the very first time in fall 2015.
Jun 26 • 10 tweets • 5 min read
(1) Given all the hate towards $COST on Fintwit recently (on multiple alone), I thought this post provides perfect clarity towards how institutional investors think. Really don't want to spend time on this name but the noise is deafening. Some thoughts:
(2) The reality here is that NOBODY shorts a stock professionally based only a valuation thesis. Just like how value managers won’t buy every stock that is cheap – the overall market tends to need something more. That something can’t be only a macro call as that’s probably the easiest thing to hedge (i.e. there are much better ways to execute that idea).
Unless you have a distinct view that $COST is going to miss, or the story itself will meaningfully change, here is what most likely will happen even in a deteriorating macro environment: Costco will simply grow into its multiple, on a relative basis. Will there be downside? Most likely. Will it be anywhere near practically the rest of the retail industry? Unlikely. Long only investors have to remain fully invested and pretty sure they won’t be selling Costco to buy $ANF in that scenario. Same thing with $ORLY.
May 28 • 8 tweets • 7 min read
(1) Fashion Island Mall, Newport Beach is fantastic place to assess the current Athleisure debate. $LULU, Rhone, Vuori, Alo, Athleta ( $GPS), and Fabletics all close to each other. It's also littered with the ghosts of formerly hyped but now dead brands such as Kit & Ace. Here are some of the takeaways and follow up analysis from my channel check trip this past holiday weekend:
(2) First store visited was Vuori. Initial observation is there is nothing technical about this product mix. Could very well be $ANF selling most of this. Started looking at tags to understand product manufacturing. Weird – this tag has 4-5 pages and specifically names “Top Summit Garment Inc.” along with their address. I don’t ever remember seeing a $LULU tag like this.
tells me Nike is the number one customer of this manufacturer and Vuori is number two. That initially looks surprisingly good as typically harder for newer Athleisure brands to use established brand manufacturers. However, this isn’t a top ten manufacturing partner of Vuori.
Come to learn that not a single major brand meaningfully sources from the larger Vuori manufacturers. The best you will find is a small amount of Fila product sourced by their largest manufacturer, EMPEROR (VN) CO. LTD. But what is really troubling here, is that Vuori is by far the largest customer for their top four manufacturing partners (by a factor of 2x-10x). I will likely talk more to why that is troubling on the day that Softbank pushes Vuori to file an S-1.
Here are the only other brands of note that meaningfully source from these manufacturers: Tommie Copper, Eddie Baurer, 5.11, Birddogs, Rogers Sporting Goods, Genesco, and Rip Curl Canada. Not necessarily the brands you associate with taking market share from Lululemon.
Didn’t notice any promotions in the store. There was one other customer in the store when I visited, which was towards the lower end of the traffic spectrum of the day.Importinfo.com
Apr 21 • 12 tweets • 6 min read
(1) I love $FND. Best story in 20 years for retail. Took it public and am honored I was Bookrunner on the IPO. Seriously love the entire management team, with a similar passion as how they approach their business. Alas, can no longer defend where it trades.
(2) There are many historical examples of the buyside getting over its skis on their own volition, only to later penalize the company itself. You know what $FND itself is not doing? They are not pumping expectations whatsoever – they have been very fair with all of their guidance assumptions in 2024. Alas when you trade at a 55x+ FY1 P/E, there is not a lot of room for honest debate.
May 21, 2023 • 23 tweets • 6 min read
A lot of noise on #Fintwit regarding upcoming $RH earnings this week. I covered the company at a sell-side bulge bracket from 2016 to 2019, which included a dramatic investor sentiment change from Gary is terrible to he’s the next Steve Jobs. Here is my preview:
(1) $RH guided 1Q23 on March 29th. Since that time, US Census Retail Sales show April sales for Furniture industry down almost 9%, worst month since Mar-May 2020 and 2009 before that. March was down almost 3% so significant sequential industry deterioration.
