NKE

Lance Armstrong Ruins Dick’s Sporting Goods’ Fourth Quarter

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Monday morning, sporting goods retailer Dick’s Sporting Goods (click ticker for report: ) announced results for its fourth quarter. Revenue fell short of consensus expectations, growing 12% year-over-year to $1.8 billion, even though the firm had an extra selling week. Earnings per share fell well short of expectations, growing 17% year-over-year to $1.03 per share, even though the company had $0.03 added by the extra week of retailing. Dick’s Sporting Goods had been on a roll throughout most of 2011 and 2012, but same-store sales growth totaled just 1.2% year-over-year growth during the fourth quarter. Same-store sales at Dick’s Sporting Goods locations actually dipped 2.2%, though Golf Galaxy’s same-store sales increased 1.3%, and e-commerce sales soared 54%. Management identified hunting … Read more

Foot Locker Posts a Strong Fourth Quarter; Mr. Market Questions Guidance

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Athletic footwear retailer Foot Locker (click ticker for report: ) announced fantastic fourth quarter results Friday morning, finishing off a tepid 2012. Revenue jumped 14% year-over-year to $1.7 billion thanks to an extra selling week, which was slightly better than consensus estimates. Earnings per share, adjusted for one-time impairment charges, jumped 33% year-over-year to $0.73 per share, slightly above consensus estimates. This did, however, include a $0.09 benefit from the extra week during the quarter. Same-store sales, one of our favorite metrics to measure the performance of retailers, were fantastic, growing 7.9% year-over-year. The winter quarter is notoriously strong as several of the companies partners, including Nike (click ticker for report: ) and adidas, release extremely popular basketball models; this winter … Read more

Who’s Amazon’s Next Victim?

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An interesting white paper was released recently, analyzing how Amazon (click ticker for report: ) is altering the retail landscape. The paper itself had some interesting insights, but our favorite takeaway of Placed’s work was the top ten companies at risk. 1.    Bed Bath and Beyond (click ticker for report: ) 2.    PetSmart (click ticker for report: ) 3.    Toys ‘R Us 4.    Best Buy (click ticker for report: ) 5.    Sears (click ticker for report: ) 6.    Barnes & Noble (BKS) 7.    Kohl’s (click ticker for report: ) 8.    Target (click ticker for report: ) 9.    Costco (click ticker for report: ) 10. JC Penney (click ticker for report: ) For the most part, we agree with the list, … Read more

Problems Persist at Under Armour But Cash Flow Improves

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Athletic apparel giant Under Armour (click ticker for report: ) recently reported strong fourth quarter results. Revenue jumped nearly 26% year-over-year to $506 million, exceeding consensus expectations. Earnings were in line with consensus estimates, growing 52% year-over-year to $0.47 per share. For more than a year, we’ve been cautious about the way the apparel firm has been managing its cash flow. After a warm fourth quarter in 2011, the company was saddled with large amounts of product that strained liquidity through most of the year. However, 2012, and more specifically, the past two quarters, represented a push in the right direction. Under Armour’s inventory declined year-over-year during the third quarter, and we once again saw inventory decline 2% year-over-year during … Read more

Lululemon “Disappoints”; Under Armour Looks Worse

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Athletic retailer lululemon (click ticker for report: ) raised its fourth quarter guidance yesterday, but not as much as the Street had hoped for, as shares have been tumbling since. The firm announced its revenue is likely to be $475 million to $480 million, the high end of its guidance range, but below the consensus estimate of $489 million. Same-store sales guidance of high-single-digit growth was reiterated (consensus was at 10%), driving earnings per share of $0.74—above the firm’s prior guidance of $0.71-$0.73 and equal with consensus. In our view, the stock’s move to the downside was an overreaction, but understandable. Given the company’s lofty valuation, we think market participants are looking for any weakness to close a long position … Read more

Is Tiffany Still Sparkling?

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Luxury retailer Tiffany (click ticker for report: ) reported challenging holiday sales Thursday. Global sales growth came in at 4% ($992 million)–the low end of the firm’s previous guidance range–after sales really slumped in North America. Same-store sales at the Tiffany 5th Avenue flagship store in New York and stores throughout North America declined 2% during the holiday period. Internet and catalog sales in the region did increase 4%, leading total sales in the Americas region to increase 2% on a constant currency basis (and 3% on a reported basis to $516 million). This could be a negative for other stores such as Saks (click ticker for report: ) that are so heavily tied to New York flagships, but we … Read more

Finish Line: A Turnaround?

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Athletic footwear and apparel retailer Finish Line (click ticker for report: ) reported highly disappointing third-quarter results Friday morning. Revenue grew 5.2% year-over-year to $296 million, in-line with consensus estimates. Earnings were incredibly weak, as the company was roughly break-even for the quarter, well below the consensus estimate of $0.10 per share and down from earnings of $0.11 per share in the same period a year ago. We were not expecting such weak quarter, particularly given the company’s increased focus on basketball shoes, as well as the blockbuster lineup of basketball shoe releases from the likes of Nike (click ticker for report: ) and adidas in the third quarter. Basketball wasn’t the problem, as management noted that basketball shoe sales … Read more

Nike Reports Second Quarter Results; Shares Split

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Late last week, athletic footwear and apparel heavyweight Nike (click ticker for report: ) reported strong second-quarter results. Revenue of $6 billion was 7% higher than a year ago, and it was also slightly better than consensus expectations. Earnings were also better than expected, growing 11% year-over-year to $1.14 per share, aided immensely by a large share buyback. We plan to adjust our report and fair value estimate on Nike to account for the stock split soon. We like to focus on Nike’s gross margins, which were down 30 basis points year-over-year to 42.5%. Though we are pleased to see gross margin declines moderate, we are a bit worried that gross margins are going to be permanently lower than the … Read more

Lululemon’s Growth Hasn’t Stalled

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Yoga pants and athletic apparel maker Lululemon (click ticker for report: ) reported fantastic third quarter results Thursday morning. Revenue jumped 37% year-over-year to $316.5 million, slightly better than consensus expectations. Earnings jumped 44% year-over-year to $0.39 per share, which was also slightly better than anticipated. Yet again, the company proved to be immune from broader macroeconomic pressures, with same-store sales jumping 18% compared to the same period last year. Gross margins fell but held up fairly well, dropping only 40 basis points year-over-year to 55.4%. Fourth quarter guidance implies that margins will be lower in the next quarter as well, but with sales growing at such a rapid clip, we think some slight compression is to be expected. Still, … Read more

Are Any Rumored Buyouts Worth Betting On?

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Buyouts and private-equity acquisitions can provide powerful stock moves and often act as the catalyst to drive stock prices to intrinsic value. In the portfolio of our Best Ideas Newsletter, we had held shares of Collective Brands. We liked the company’s valuation, relatively small size, and its attractiveness to other companies (among other things). And while we’d never own a stock solely on speculation of M&A activity, a buyout turned out to be the catalyst for our call on Collective Brands to work out for members. Shares proceeded to appreciate over 35% on our cost basis! In recent months, we’ve heard rumors of cash-heavy companies and private equity funds interested in several different deals. Let’s take a look at a few higher-profile names. … Read more