Press "Enter" to skip to content

Business Talk: Angry Sneaker Stock Dude

Share In-Depth News from AHN

If you look back through the Insider Ties and Business Talk categories of the site you will see a lot of information about Stocks. Recently, a lot of websites are saying that Under Armour and Adidas are becoming better bets for the stock market. Consider this analysis from the Motley: http://www.fool.com/investing/2016/09/29/better-buy-under-armour-inc-or-adidas.aspx

While all companies hit rough patches and any company can fall, there has to be a clear understanding of what is happening and the bottom line is if you listen to these hedge fund and stock advisers, you’re going to find yourself in a bad place. It’s like looking at Puma SE stock prices. Puma SE is trading at 270.00/share, Nike is trading at 53.00/share, Under Armour is at 38.00/share, and Adidas is at 87.00. If you only look at trade share prices Puma looks like the best bet at 270 right? Well, what has to be understood is that Puma hasn’t split its shares. Nike has several classes of stock A,B, and C. There are more shares available with Nike, adidas and now Under Armour since they recently split shares. You have to look at the total picture not just the surface. It’s like asking a person would you like 270 dollars or 53 dollars 10 times?

I’ve been saying this over and over and over and eventually someone will understand these three letters, DTC. Nike’s Futures orders are down. If you don’t know what that means ask me in the comments. Analysts are looking at this and the fact that Nike isn’t hitting certain projections. What they aren’t analyzing is that Nike trades at an average of 59. What is more important is that the money coming into Nike is going to drop when Futures are down and projections aren’t being met, but no one is taking into consideration that Nike now has about 900 stores open. Consider this Finish Line only has about 600 with plans to close some of those. Then take a look at Footlocker and notice that Foot Locker’s stock is strong and they have about 1800 stores. DTC, DTC, DTC. While Nike is taking a hit in the short term on Futures orders, Nike is actually earning more money on the production of their shoes because Nike is now the second largest retailer of its footwear. The market isn’t analyzing the correct information. Nike’s goal is to do 16 Billion in a year. What is the fastest way to get there

A) Selling your product at half price to stores

B) Undercutting those stores and selling directly to your consumer

When your brand is now controlling more of its inventory every pair earns more money but because there aren’t as many accounts on the surface, but there doesn’t have to be. Nike’s ecommerce is exploding.  When I take a look at adidas’ growth, it is based on a mercurial rapper who could alienate a million people at the drop of a dime. It is also rooted in casual running and in this area, consumers are very flavor of the month. When I look at Under Armour, I see multiple mistakes taking place and the brand isn’t doing anything to offset the mistakes. As a matter of fact they are doing some brilliant things and then taking a little knife and whittling away at their own brilliance. Neither adidas or UA will sustain with all of their eggs in two or three baskets. Adidas is going to take a hit when basketball season and cold weather hits unless they bastardize their NMD and Boost shoes for Sneakerboots. UA needs a better group of people in place to capitalize on their fantastic UAS line and the lack of cross promotion of their best athletes in this apparel. They also lack outlets of distribution and are relying too heavily on Pureplay for the UAS line and the Curry 3 is now going to translate into casual wear and with KD in a Warriors uniform they should be on high alert and really be in recovery mode.

If you are looking at picking up adidas and UA in lieu of Nike… better think about it.