HOTT, KSWS.
livn-let-buy,
Strictly based on the chart, I think HOTT has downside risk to 13 or 14. I've never heard of the company so can't offer any comments on their fundamentals. I like Ron's idea of picking what you think are the top 3 retail stocks based on fundamentals and technicals and phase into them. These stocks will eventually turn around and dollar cost averaging into good companies when they are out of favor is a decent strategy. It isn't as exciting as day trading Internet stocks, but I think that one can make a decent return. Best of luck with it.
KSWS.
The weekly point of sale data is out for the week ending January 20 and it looks positive for K-Swiss again.
Here is a quote from Merrill Lynch's weekly report dated January 20, 2000.
"K-Swiss exhibited triple digit unit and dollar sales growth as the recently announced order cancellations have yet to register in the Sportstrendinfo.com numbers."
Here is the data from week 2, 2000
Sales and Market Share Comparison by Brand:
K-Swiss Week 2, 2000 vs. Full Year 1999
Unit Change YTY: +168.6% vs. +106.5%
$ Change YTY: +145.2% vs. +109.0%
Unit Share: 3.7% vs. 3.4%
$ Share: 3.5% vs. 4.0%
The unit market share is up 0.3% while the $ share is down 0.5%. This could indicate that either retailers or K-Swiss are discounting their shoes slightly...most likely to help move excess inventory through the channel. I view this as a short term problem, and the discounting doesn't seem excessive enough to significantly reduce margins (if K-Swiss is offering the discount) or damage the brand name image. Retailers are most likely offering the discounts, and somebody on Yahoo reported that a retailer had K-Swiss shoes marked down $5.00 per pair.
The reason that I think this is a short term inventory issue is because K-Swiss' international future orders were up. Only their domestic future orders were down, and the YTY comps have been up over 100% for the first three weeks of this year. In addition, K-Swiss' market share has been rising slightly. The best explanation for this is a short term inventory correction in the US. The company's extraordinarily high revenue growth last year could also indicate that retailers have too much inventory. If there wasn't high demand for their shoes, I'd be concerned. But with 168% growth in units sold, it shouldn't take long to work through the excess inventory. If this was a fashion/style problem, I don't think that their comps would be up over 100%, nor would their market share be increasing. Also, February is the best month for shoe stocks, outperforming the S&P 500 about 85% of the time.
Nike's unit share fell to 32.4% from 34.6% and their $ share fell from 42.0% to 36.0%. Their unit change YTY is also down from last year. NKE trades at about 25 x earnings, while KSWS trades at about 6 x earnings. The market isn't always rational in the short term. |
