ONON, LULU, NIKE, DECK, BIRK, ANTA Sector Analysis

Duration: 15:30 2372 transcript words EN summary

Video summary

The video provides a deep dive into several major fashion and footwear stocks, including On, Lululemon, Nike, Deckers, Birkenstock, and Anta, framing the analysis through the lens of value investing. The speaker emphasizes that while these brands often appear attractive when they are booming, the most compelling entry points arise when stock prices decline and market sentiment turns negative. He notes a psychological tendency among investors to praise stocks like Nike during their highs but criticize them during downturns, arguing that true value is found when companies look "ugly" due to slowing growth or scandals. The speaker shares his background in fashion business from the Amsterdam Fashion Institute to lend credibility to his assessment of these niche markets, warning that once a brand hits a revenue ceiling, it must expand into new, riskier territories or face stagnation, which often leads to decelerating sales and lower profit margins. A significant portion of the discussion focuses on the specific risks associated with each company, particularly regarding brand longevity and management changes. The speaker highlights that On is facing challenges as its key ambassador, Roger Federer, loses billionaire status, while Lululemon has stalled after seven years of rapid growth and faces issues in China and recent scandals. He expresses skepticism about Deckers' future explosive growth despite its stock buybacks, noting that fashion brands rarely last forever without quality degradation, a trend he observes in Birkenstock under private equity ownership where product quality has reportedly declined. For Anta, the analysis points to steady but not explosive growth in Asia and strategic acquisitions like FILA, though the speaker considers it interesting rather than a definitive value play. Conversely, Nike is described as having lost its luster due to intense competition, shifting consumer preferences toward younger trends, and potential cultural controversies, making it a risky bet despite its low valuation. Ultimately, the speaker concludes that while these fashion stocks offer opportunities for significant returns if managed correctly by new leadership or driven by emerging markets like Asia, they generally do not fit his strict criteria for value investing due to their inherent volatility and reliance on fleeting trends. He advises caution against treating high-growth fashion brands as safe havens, noting that the possibility of total loss remains a real threat when quality erodes or private equity owners cash out. Instead of betting heavily on these volatile sectors, he directs viewers toward his diversified research platform where he manages portfolios with lower risk and more certain returns. He leaves the door open for future value opportunities in fashion but suggests that for now, investors should be wary of the "green banana" phase of growth stocks and wait for clearer signs of stability before committing capital to these high-risk, high-reward ventures.

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Good day, fellow investors. When fashion stocks look ugly, when everyone hates them, that's the time we value investors dig deep. And this video will touch on a few fashion stocks. We discussed Nike. We'll also touch on your extremely negative comments on Nike, which is the opposite. When the stock price was much much higher, there were only positive comments. That's how the human psyche works. Then there were a lot of comments there. Ant Lulu cheaper growing like crazy in Asia. Some comments on on the sportsware brand from Switzerland. Some were buying Nike. If it goes lower, some always say they will buy more. Adidas is a better stock. Deckers, check those. Then Nike going good with the young ones. And even Michael Bur has added something that you didn't comment that he bought Birkenstock. That's the stock we need to discuss with a significant portfolio position. And I also think Lululemon is a huge position for him if not the top position. Before we start, two things for context. I did work for three years and something helped with the master's degree there, the business master on the Amsterdam Fashion Institute. So whenever my wife tells me something about fashion, I always tell her, "Sorry, I worked on fashion." And I'm doing this also for the big research block that I'm doing to set up a proper diversified portfolio on my research platform so that platform members can get more value and also I'm sharing that research here on YouTube. You see what fits you, I'll do my implementation on the platform. You can check my research platform. I'm looking for value investments, low risk, good to high returns. We manage three portfolios. The personal portfolio, the model portfolio, now it's at five positions. And then the diversified portfolio. The plan is to really build it properly. This was a small one. We did 10% over the last two years. We doubled some diversified portfolio, but now I'm investing 100K in it. If you want to follow the price of my research platform will go up at the end of the year but not for you never ever. So if you join now the price stays the same inflation and everything. You have some nice reviews here. You see whether something of this fits you. Let's start with on on stock on holding. And uh even a few days ago, my wife said, "What's going on with Onon?" Then I looked a little bit and the biggest tragedy is that Roger Federer is not a billionaire anymore. I don't know what he's doing, how he will manage to cope with that. He's just a poor multi-und millionaires. Okay, but Rich Roll, I have to look like this in a few years. So, I'm working on it. But he's also changing shoes from on on. So there's something going on with the brand. And if you're very interested in what my better part is doing, I'll put the link also in the description below. And here you can check about health everything. So she's taking care of me. She says you just need to now look like rich. That's the plan for the next few years. Working on it. As you're also looking in the links in description below. If you're wanting to build an international portfolio with the best global broker, check interactive brokers. If you use my link in description below, you really support the channel and I can make more of these stock analysis. Let's see what's going on. We have a recent fashion listing. That's always something to think about. a few years down then up booming and now significantly down which means growth is decelerating. P ratio of 20. I've looked a little bit at the situation and net sales are still growing but not at the higher rates. And something very important with fashion businesses. Whenever US sales starts to stagnate, analysts panic and then it is like an annunciation of what will happen next globally and that is terrible for the stock at first. And we can see here huge growth rates 20 30 and now we are at 13. What's going on with new fashion brands? Those are cool until those aren't. And they can develop in a niche market and then they start to grow bigger and that is very very risky. A brand like this. I remember here my colleagues in Amsterdam they were some of their spouses were working at under arour. Should we buy stocks at 15% discount? I told them if you think Under Arour will be a better business in 5 to 10 years that didn't happen. As another friend of mine says, never invest in green bananas. That's not value investing. Anyway, people change. Rich roll goes Stephen Curry goes it isn't as it was and that is a huge risk. Same thing can happen to on on then I look a little bit the numbers booming reaching the three billion situation good profit margin everything looks good then the sales start to go lower and the question is will on grow with a P ratio of 20 if they grow 10% it's okay if they grow higher 20% then it is cheap the analysts are concerned on slowing sales because if that repeats goes lower and lower then it gets very ugly. Some analysts say buy constructive capacity for future growth but some say lower targets no visibility let's see if they can scale. The analyst estimates are positive growing earnings over time. But you can see analyst as the stock price goes lower then after it happens they adjust their stock prices and now they have started adjusting. So if there is an more decline slowdown they will adjust following but everyone sees it as a good buy except one as a strong sell. Similarly, under armor, net profit margins, strong growing, going public, and then it goes into the trash like old smelly shoes. Wall Street is all about growth. As long as a new public company can grow is good. If it starts decelerating, it gets ugly. And the question is, can the company double in the next 5 years? It's a pure pet of growth. But when it comes to fashion stocks, Under Arour, this that there is this three 4 billion ceiling that they hit and then they pass the niche and they they need to expand into new markets. That's very expensive, very risky, less profitability, lower margins, slower growth. They then compete with the big boys and that's the business risk. Similarly, Lululemon has passed that four billion let's say ceiling went to 11 billion in revenues. But since what was this 2021, 2019, 2018, it's grew for seven years at great rates. Since then, the stock has done nothing. So if we continue speaking of Lululemon, his Michael Bur discussing how it did great in the past. Yes, it did great in the past. Will it be another of these brands? Who knows? He says that the bad management at the moment is great. The new CEO should bring to changes, cash flows, buybacks. Any shakeups by the new CEO can bring it back to growth. So guidance still growing, still okay. But you can see here not growing China the drum scandal things like that Lululemon is very cheap from that perspective but I also told you I'm not betting when it was at 200 then final call on 160 then it went even lower the situation here is you might catch the bottom what's the value to private owner 10 billion but we are there 1 billion free cash flows that would make it interesting so no not yet margin of safety on on growth bet Lululemon it's cheap but as a value investor I need more certainty if you want to risk 7 10% of your portfolio then now it is the time to buy next one Deckers outdoor peaking a year and a half ago then crashing disastrously is a bit different because they have a few more brands we discussed this it went up a little bit now it's back down singledigit growth estimates not that great. And now the question is when it will boom again. When it was growing like crazy then the market loves it. Then when it crashes the market hates it. But again P ratio 13 stable market saturation reached. They are buying back stocks. But when they buy back stocks that means that the brand will last forever which is again a big risk with fashion stocks. The question is will the brand be there in 20 years? We don't know. It would be cheap at 5 billion more brands. So not that explosive growth stable perhaps doing better doing less better but not that interesting. Antasports Chinese Hong Kong Asian production growing steadily dividends buybacks good percentage of net income buying FILA. They just bought a stake in UMA. And if you look at what private acquisitions go, Frig Capital acquire Sketchers at a P ratio of 15. To get the margin of safety of knee stocks, you need a P ratio of 10. When I see Chinese ski equipment, shoes, then I see of competition. There is also Decathlon. You can buy everything there also other brands. Ant cheap. It has a Asian position. It is interesting, but not yet cheap enough. Adidas. It was expensive. It was cheap. It was expensive. It was cheap. Now it's somewhere in the middle P ratio of 20. When it was at 115, I told you you will likely make money on it. But the shoes were crazy. Then they went back to the standard designs and the stock exploded then went down. Things like that. It's not cheap. No value there. Depends on the fashion trends. Consumer preferences are fickle. Too risky. Now you can see here how those margins go up and down depending on demand. They started growing a little bit again margins up markets loves it again which means it's risky. Now Birkenstock holding went public a few years ago the hairs of the Birkenstock holding bought a hotel in Split 10 years ago. That's in my country Croatia. Then they sold the company. So the owners left. And here we come to another factor with fashion companies. when they go public then private equity takes over. Private equity is about making profits going public listing on the growth things. If you make profits, what happens to quality? The last few years, Borkertop quality went down the drain. And that's something Michael Bur didn't check. Growing, growing, then growing slower, stagnating profits. The private equity is cashing out. They don't care anymore. The management will likely take that situation there. They have these brands, but the quality is going lower. Once the quality starts to be an issue, the private equity is out, the owners are out, it gets ugly. Speaking of ugly, Nike, how it looks terrible. These brands could not look worse. Well, if you want to buy something, it's better to buy it at 40 than at 160 when it looked great. So, that's something. I'm not saying nothing wrong with the comment great comment here. I'm just saying it's better to buy when it looks ugly and there is only upside left than downside. Some other comments we are getting older not for us 40 something dude the youngers are going for I show speed or something like that. Some say that they will buy lower but it was at 60 now it is 40 and then always people delay those buys but Peter Lynch said you buy a turnaround when it starts to go up. So now it's at 40. You might wait for it to get to 50 and then ride from 50 to 70. That might be the least risk. If it goes lower now, you buy the trend up. Something very interesting from Peter Lynch. And then of course the key is competition. Nike, Pumac, Omero. It was that was that. Now we have a dozen of those brands. And also we don't know whether Michael Jordan can still dunk. Going woke things like that. Very interesting. Michael Jordan, who knows if he can still dunk. As we already said, huge competition in the market. So, that's something copycats in China, but they would need to go to straight people in the marketing, things like that. Interesting comments inside in the decline. Perhaps some private equity will take it over at 70 billion. Perhaps it has to go lower. But the most money you can make is when something looks ugly. For me personally, margin of safety is always the private equity takeout which is at the P ratio of 10 because they will pay not more than 15 and then they will wait for ugly times. You can have some margin of safety. If things don't develop well then it gets very very ugly from the basket there. Lulu is cheap. Deck okay could get a little bit cheaper. Anti is interesting as a position. The rest is more bets gambling. Nike perhaps is cheaper a little bit. But for me, this is not value investing. So whenever somebody asks me again about fashion stocks, I'll reference to this video. But at some point, fashion stocks will be a value investment because if value investments don't look the price goes lower and lower, but then again there is always the total loss possibility. So, I will leave this to private equity and Michael Bur and it's just not for me. However, don't get me wrong, Lululemon, it's already up 20% now. If you buy it, you can make 50% if the CEO does well. Deck cheap, not that much downside from that private equity perspective. Ant also keeps on growing in Asia as Asia grows. So, interesting, but just not for me comparatively. We just did the quadrant. Check that video. There are some better things, less risk. And also, you can check my portfolio on my research platform. Thanks for watching.