UAA: 4Q26 EPS: Reworking the UAA Baselayer

研报英文原文证据摘录

UAA: 4Q26 EPS: Reworking the UAA Baselayer

an attempt to compete

with NKE and Adidas - including on price. Thus, UAA removed its key competitive advantage.

This was compounded by the fact that the sneaker market pivoted - hard - to basketball and to

lifestyle. UAA was deficient in these categories and was never able to gain steam in the category.

This further diluted overall brand heat. However - in 2024 UAA announced that founder Kevin

Plank would return to UAA as CEO. Since then UAA has taken several positive steps to find the

appropriate sales level to eventually grow off of - most notably cutting SKU breadth and overall

inventories to re-focus on football and a younger customer.

3. Significant Earnings Upside if Plank is Successful. Just three years ago UAA earned over

$0.50 (our current "bull case" is only $0.40) on a MSD operating margin. The mid-life crisis

discussed above led to a vicious spiral for UAA with lower overall sales (particularly difficult for a

manufacturing/wholesale-based company; still 60% of revenues) and lower quality sales (more

to off price than full price). A focal shift away from the high school athlete - where UAA was once

a share leader - diluted the "cool" aspect of the brand which then lead to traffic and mix issues

in its DTC channels. This led to lower profitability across channels, and significant deleverage on

a cost structure that was once built to sustain significantly higher revenue. Should UAA find a

market segment that allows it to resonate with the core athlete and differentiated product, there

is certainly upside from the under-earnings compressed margins today, and would represent

significant EPS upside to where one could argue the currently troughing on earnings amidst its

reset.

The Bull vs. Bear "Tug of War"