UA just published their Q2 result. Their footwear sales surged 58 percent year-over-year to $243 million. I assume most of those were in the North American region. Were they perhaps the reason SKX declined domestically?
(SKX is my third largest position, no position in UA)
UA just published their Q2 result. Their footwear sales surged 58 percent year-over-year to $243 million. I assume most of those were in the North American region. Were they perhaps the reason SKX declined domestically?
Hi Stenlis, that’s hard to say. Let me put it in perspective: UA was coming off such a small base (they only recently entered the shoe business) that that 58% rise only represented $89 million. SKX’s sales were $878 million for the quarter, and were UP $288 million in the first half, more than UA’s entire footwear sales for the 2nd quarter that you just quoted.
We’ll have to see what the future holds
Saul
UA just published their Q2 result. Their footwear sales surged 58 percent year-over-year to $243 million. I assume most of those were in the North American region. Were they perhaps the reason SKX declined domestically?
I agree with what Saul mentioned about the scope of the footwear sales at the two companies, and I’ll also throw out a thought: I’ve also gotten the impression that UA’s footwear is geared toward athletics more than casual. A quick google search for UA shoes returns this as the top result: “Footwear - Buy Workout Shoes & Cleats | Under Armour US” https://www.underarmour.com/en-us/footwearhttps://www.undera…
Take that for what it’s worth, but I do think there’s a niche available for both companies in footwear.
Bear
This might be slightly off topic but I find the markets reaction to SKX and UA Q2 results bizarre. Both mentioned currency movements and some retailers going bust (excess inventory in U.S) affecting profits. However in the first half of 2016 SKX net earnings are up 26% and even after recent broker downgrades 2016 EPS is expected to be up 25% over 2015.
UA have forecast that operating income for 2016 will be up 8-9% on 2015 and concensus forecasts have 2016 EPS down 45% compared to 2015.
Given UA was on a sky high P/E and SKX on a modest one you would have expected UA to be the one that would lose a quarter of its value.
After the share price falls SKX is on a 2016 forecast P/E of 13.1 and UA is on a 2016 forecast P/E of 67.6!
Also SKX is sat on $628.8m cash vs UA’s $121m
I can only conclude that some investors have got tunnel vision and are looking at just Q2 and forgot the blowout results of Q1.
I bought some more SKX yesterday.
Unwize
UA is a different market from SKX.
UA has Tom Brady, Jordan Speith, and Steven Curry as spokesmen pushing the product. Arguably the best NFL, PGA, and NBA players today. It is a younger and/or athletic group. Technology is also part of UA.
SKX is not a hip shoe and appeals to many older people who want very comfortable shoes while walking without caring as much for a hip style. A growing crowd with an aging population worldwide.
I think both companies have plenty of room for growth and can prosper.
Htownrich
Long UA
Htownrich
I have no doubt UA have plenty of growth potential left and I am a fan of their T-shirts/shorts and underwear, but paying over 65 times earnings for a company forecast to grow net earnings at 12% this year(if you adjust for stock split) seems a very high price to pay.
Any slip ups could be heavily punished, the share price could halve and still be on a P/E of nearly 34.
It isn’t just the P/E that’s highly rated, price to sales and price to book value are also very high.
regards
Unwize
UA is not eating Sketcher’s pie. UA is selling to real competitive athletes. Some time in the future UA may expand its market, but its shoes are not that competitive with Sketchers.
Adidas, perhaps Adidas is taking back marketshare that Sketchers took from it over the last few years.
One analyst put forward the proposition that this is but transactional friction in regard to changing distribution. Sketchers, like Nike, and so many other companies, are moving more and more product distribution away from wholesale, into their own stores, and into e-commerce. And i the transition, there is some loss as the process takes place and matures.
We of course do not know the effect of this, but Sketchers has risen to be the #2 shoe seller in the United States. Hardly the act of an incompetent company.
Tinker