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Under Armour Stock Down 24% After Disappointing Earnings Report
Under Armour (UAA) reported Q3 revenue declined 4.5% YOY (to $1.41 billion) and the company reduced full-year profit and revenue expectations (to low single digits) to “reflect lower North American demand and operational challenges”; announcements that sent shares tumbling 24% (to $12.52) by Tuesday’s close. Analysts say a lack a loyalty among consumers, their failure to connect with the female demographic and their inability to compete with Nike (NKE) and Adidas (ADDYY) from a pricing standpoint, are behind the company’s issues. CEO Kevin Plank tried to put a positive spin on the quarter, saying the company’s “international business continues to deliver (revenue is up 35%) against our ambition of building a global brand”.
Howie Long-Short: UAA shares are down more than 50% this year and 75% from the company’s 2015 peak ($54.70). The company posted their first ever loss in April and Q3 sales were down for the first time since 2005. Based on CEO Kevin Plank’s comments, I’m not sure things are going to get better. Plank stated that “no one is looking for Under Armour to have the $25 hooded fleece. They want Under Armour at the $75 and $100 price points.” He’s wrong. No one in North America, particularly women and kids, want to wear the Under Armour label; certainly, not at $100. UAA is concerned about maintaining margins, but should be focused on remaining relevant.
Fan Marino: The much-anticipated Curry 4 was scheduled to drop on Friday October 27th, but the sneaker’s release has been pushed back to November 18th due to “last minute design changes”. Retailers aren’t pleased and shareholders shouldn’t be either. The company is banking on the Curry 4 to lead its revival. With Nike owning 95% of the basketball sneaker market, analysts fear sneakerheads will have moved on to the next big release by then.
Note: The summary for this story was written by our friends at The Water Coolest. Check out TheWaterCoolest.com for the latest market news and professional advice.
Could ESPN Abandon the NFL?
James Andrew Miller, co-author of the national #1 NYT bestseller Those Guys Have All the Fun, Inside the World of ESPN, wrote an interesting article suggesting that ESPN (DIS) could “abandon the NFL”, at the expiration of their existing 8-year $15.2 billion contract in 2021. Miller pointed to the lack of specific language in affiliate contracts requiring the network to carry NFL games, ESPN’s displeasure with the quality of game schedule, the disproportionate amount ESPN pays for rights when compared to the league’s other partners and the potential future interest from digital media companies, as reasons why the network may decide not to carry NFL games for the first time since 1987. Under the existing agreement, ESPN holds the rights to 17 Monday Night Football games and 1 Wild Card playoff game, per season.
Howie Long-Short: The basis for Miller’s article is that the combination of cord-cutting and burgeoning rights fees create a scenario where the network can no longer afford to carry NFL games. I’m not convinced. Sports leagues are going to look to maximize revenue in their next round of negotiations. I expect television broadcast rights to remain stagnant, perhaps to even slightly decline (makes sense as the audience continues to decline), which should enable ESPN stay in the game. The growth for the league will come on the streaming side, where Facebook (FB), Google (GOOGL), Amazon (AMZN) etc. can and will bid for rights.
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Fan Marino: You don’t replace the NFL, as it gives the network 18 of its biggest draws of the year. On Sunday evening, for just the 2nd time since 2013, the World Series outdrew SNF head-to-head (12.8 to 9.4 overnight). The 9.4 SNF drew opposite the World Series rated higher than the highest rated college football game in Fox (FOXA) history (last Saturday’s Penn State/Ohio State game, 9.0) Ratings are down, but the NFL is still king; and you’re not the “worldwide leader in sports” without it. As for me personally, ESPN has my $7/month so long as they have the college football playoffs.
SeatGeek and Facebook Announce Partnership
SeatGeek has announced that Facebook (FB) will become an official ticketing distribution partner; enabling leagues and teams to sell tickets to games, via SeatGeek, on the social network. Best known as a resale aggregator, SeatGeek will provide FB with a 3rd party API (SeatGeek Open) that will integrate directly with their ticketing interface; giving fans the ability to purchase tickets without ever leaving FB. MLS’ Sporting Kansas City is the first professional team to take advantage of the partnership, adding a “get tickets” icon for each game on their Facebook Events page.
Howie Long-Short: Facebook has similar distribution deals in place with Ticketmaster (LYV) and Eventbrite, so while this partnership isn’t exactly revolutionary, it is significant for SeatGreek. It means that SeatGeek can now sell event organizers on Facebook’s reach and their ability to “put tickets where fans are already spending their time online”. Sporting KC is the first, but they won’t be the last to take advantage of this sensible partnership.
Fan Marino: The average price of tickets to Game 6 of the World Series dropped 21% (to $1,044) after the Dodgers lost Sunday night’s Game 5, putting the team on the brink of elimination. Fans could get in to the building last night for as little as $394. That won’t be the case for tonight’s Game 7. The lowest priced ticket available on SeatGeek, as of midnight, was $1,215.
Note: The summary for this story was written by our friends at The Water Coolest. Check out TheWaterCoolest.com for the latest market news and professional advice.
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JohnWallStreet is not a person or location, but a destination for the educated sports fan.
While we won’t be publishing “hot takes” on LeBron’s relative greatness to Jordan, we will be offering up the most relevant sports related finance news, in easily digestible bites, with commentary from both the equities analyst and sports fanatic perspectives.
We’ll cover publicly traded professional teams & stadiums, television networks, apparel & footwear companies, equipment companies, ticketing companies, content and facilities providers. If it trades on Wall Street, and has a sports angle, it’s in our wheel house.
Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Security & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.
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