Core Insights - Deckers Outdoor Corporation (DECK) is experiencing significant growth driven by its brands HOKA and UGG, while Under Armour, Inc. (UAA) is transforming into a premium athletic brand [1] - The competitive landscape raises questions about which stock offers better upside potential for investors [1] Deckers Outdoor Corporation (DECK) - Deckers is focusing on high-margin markets, with fiscal 2025 net sales reaching $4.98 billion, a 16.3% year-over-year increase [2] - Projected first-quarter revenues for fiscal 2026 are between $890 million and $910 million, with HOKA expected to grow in low-double digits and UGG in mid-single digits [2] - Product innovation is key, with strong demand for updated HOKA models and new UGG hybrid products [3] - The company is expanding its omni-channel presence, balancing growth between wholesale and direct-to-consumer (DTC) channels, with international markets outperforming [4] - Despite record results in fiscal 2025, DECK faces challenges from new tariffs potentially adding costs of up to $150 million in fiscal 2026 [5] - Gross margin is expected to decline from 57.9% in fiscal 2025, with a projected contraction of 210 basis points for fiscal 2026 [6] - SG&A costs are anticipated to grow faster than revenues, leading to a decline in earnings per share to 62-67 cents from 75 cents in the prior year [8] - DECK's stock has dropped 13.6% over the past three months due to margin pressures and cautious guidance [20] Under Armour, Inc. (UAA) - Under Armour is enhancing its DTC channel by focusing on premium pricing, resulting in double-digit growth in average unit retail in fiscal 2025 [10] - The brand's loyalty program, with 28 million members, significantly contributes to U.S. DTC revenues [11] - EMEA region is a strong performer, with plans for expansion into France, Spain, and Germany in fiscal 2026 [12] - UAA recorded a 170-basis-point increase in gross margin in fiscal 2025, with expectations for further margin gains in fiscal 2026 [13][14] - The company is targeting $75 million in annualized savings by the end of fiscal 2026 through cost optimization [15] - Despite expected revenue declines of 4-5% in the first quarter of fiscal 2026, UAA is focused on long-term brand elevation and operational discipline [16][17] - UAA's stock has gained 5.5% over the past three months, driven by improving margins and premiumization efforts [20] Comparative Analysis - The Zacks Consensus Estimate for DECK suggests a 7.6% growth in sales but a 4.4% decline in earnings per share for fiscal 2026 [18] - UAA's estimates indicate a 2.1% decline in sales but a 9.7% growth in earnings per share for fiscal 2026 [19] - DECK is trading at a forward P/S multiple of 2.77, while UAA's is at 0.57, indicating UAA may offer better value [22] - Under Armour is viewed as a better investment case due to its strategic shift towards premiumization and disciplined cost control [25][26]

Core Viewpoint - The imposition of reciprocal tariffs by President Trump has led to a significant sell-off in U.S. stocks, raising concerns about inflation and economic growth, particularly affecting companies like Nike [1] Company Overview - Nike has been struggling with a decline in its stock price, down over 36% in the last five years, prompting the board to bring back veteran Elliott Hill to lead a turnaround [3][5] - The company is in the early stages of transformation, focusing on regaining market share lost to competitors in the luxury retail and footwear sectors [4] Strategic Initiatives - Hill's strategy includes refocusing marketing on athletes and rebuilding relationships with wholesale buyers while reducing promotional online activities [4] - The turnaround is expected to take multiple years, with current tariffs already impacting Nike's fiscal outlook [5] Impact of Tariffs - Prior to the latest tariffs, Nike faced a 20% tariff on imports from China, where it derives a significant portion of its business, leading to a 17% year-over-year sales decline in China [6] - Trump's recent tariff increase to 54% on Chinese imports and additional tariffs on Vietnam complicate Nike's operational landscape, as 95% of its shoes are produced in China, Vietnam, and Indonesia [7][8] Market Sentiment - Despite current challenges, long-term investors remain optimistic about Nike's brand strength and potential for recovery over the next five to ten years [9] - Positive consumer response to new Nike products, particularly collaborations with athletes, indicates potential for sales recovery [10][12] Retail Performance - Foot Locker, which derives 60% of its sales from Nike products, has expressed confidence in Nike's recovery and innovation efforts, suggesting a positive outlook for both companies [11][12]