Under The Attack Of Nike ADI, Where Is Andrew'S Way Out?

Before the announcement of the three quarter earnings before Monday, NYSE:UA, NYSE:UAA, is experiencing a series of upheavals: the company has just announced unexpected changes in its leadership, and today it is revealed that it is being investigated by the Ministry of justice and SEC for exaggerating revenue on suspicion of accounting manipulation.

But for Andrew investors, the most troubling problem is the company's business plight, especially in North America. Under the attack of Nike, Adidas, Vans, Lulu lemon and other brands, andmar seems to have reached the stage of being at a loss. Can the three quarter earnings raise some confidence for investors?

North American business is at a loss?

According to British financial intelligence, analysts expect average sales to reach $2% to $1 billion 410 million in the quarter, and earnings per share are expected to decline to $0.18 from $0.25 in the same period last year.

North American performance, which accounts for 68% of total sales, is the key. In the two quarter, sales in the market dropped by 3.2% to $816 million, and the first quarter fell 2.8% to $843 million; the whole 2018 fell 2% to 3 billion 700 million dollars. Moreover, Andemar also lowered the sales forecast of the local market in July, from "relative balance" to "slight decline".

Looking back from 2015 to 2016, it was Andemar's peak. His stock price also hit a record high at this time. Because of the correct decision to sign Kupi, Andemar's "curry generation" sneakers were successful, when the company's quarterly revenue growth remained above 40%. But after the outbreak, Andrew's growth momentum was weak. The sale of "three generation" is no longer the same, and the main business sportswear (which accounts for more than 61% of sales) has not been able to find an effective strategy. Andemar's sportswear emphasizes professionalism and performance. More scenes are used in high endurance sports. However, the trend is that mass consumers are increasingly using sportswear as casual wear.

Andemar, chief operating officer, Patrick Frisk (Patrik Frisk), at the analyst conference after the July earnings report, said Andemar's business model in North America "is a bit complex, challenging and needs constant accumulation and development". In the face of Nike, Lulu lemon, Adidas, these powerful competitors, Andrea had to use large-scale, large-scale promotional measures to solve the inventory problem. The move has achieved some success, with inventories dropped by 26% in the second quarter, but no pressure on profits. In the quarter, andream lost 4 cents per share. This quarter is still not optimistic. According to Stifel's latest survey of consumers in the US market, although Andrew's brand recognition has improved compared with last year, sales of footwear and sportswear have been below average in the past six months.

After the personnel changes, Andemar's transformation strategy is the key.

Revitalization of North American business will become a top priority for the company's new leadership. Andemar announced in October 22nd that Patrik Frisk, the chief operating officer of the company, will replace the current CEO and founder Kevin Plank (Kevin Plank) from January 1, 2020, and Patrick will continue to be the executive chairman and brand leader.

In recent years, Andemar's personnel changes have also included Kerry Chandler, chief human resource officer who left in October last year, and chief commodity officer Henry Sta Stafford (Henry Stafford) and chief technology officer Robin Thurston (Robin Thurson) left in 2016. In the saturated market of sportswear, where is the way out for the new leader of Andrew? The obsession of product performance limits the foundation of consumers, and for a long time, Andrew's image in the consumer's mind is biased towards masculinity. Although Andrea also began to attract female users, it had little effect. Especially now Lulu lemon is deep ploughing the female market, and Andemar's resistance will not be small. In the conference call after the earnings report, can Andemar offer some meaningful and substantive measures to deal with this dilemma? Even in the growing international market, Andemar's outlook has been somewhat static.

In the two quarter, Andrew international sales increased 17%, unchanged from the first quarter, but lower than 24% in the same period last year and 28% in the fourth quarter of last year. Moreover, even after the stock price has recovered about 60% from its record highs in 2015, Andemar's forward price earnings ratio is still 53 times, much higher than that of the clothing industry 19.9 times, compared with that of Nike, which is only 29 times. At present, Andemar's transformation prospects are still chaotic, and stock prices are unlikely to rebound sharply.