Say No To Trading
Public Markets Investor, Opportunistic Buying & Cost-Basis Management
Deckers, Nike and Crocs are too hard to own as buy-and-hold investments because fashion needs constant babysitting, and there are easier ways to make money. That holds even as @teechongyen notes Deckers has been shrinking its share count with rising free cash flow and trades at about 12.5x forward earnings. x.comÂ
Deckers looks like a value trap, as fashion cyclicality has destroyed many value investors. Revenue is decelerating quickly, EBIT margins are double those of a decade ago, and there has not been a single insider purchase during its 63% drawdown. x.comÂ
Nike and Lululemon show why apparel brands almost always belong in the too-hard pile. Consumer tastes change on a whim and are hard to model, and missteps in keeping up can be the beginning of the end even for the hottest, most beloved brands. A new shirt is among the first things people cut, and structurally growing beyond brand awareness and store runways is extremely difficult. There are better places for time and money. x.comÂ
Nike's brand concerns look priced in; stabilization, not sudden revenue acceleration, is what the speculative long needs. A few good campaigns and a return to large stores could help, though China consumers will be a drag. Short-term EPS is a poor indicator, and customers may return after trying other brands. x.com x.comÂ
Nike, like other apparel makers, is uninvestable because a durable moat is near impossible in this business. Consumer preferences keep changing, requiring constant new marketing to keep people excited, and making a physical product leaves an inherently low-margin business with little long-term pricing power. A major turnaround is possible, but the business model gives no confidence in its long-term strength. x.comÂ
Lululemon, Nike and On are poor investments because their brands depend on the fickle consumer to keep them trending. The same applies to the latest restaurant chains. @CoorsLightCEO counters that this is easy to say after the fact, since Nike was an absolute compounder until 2022. x.com x.comÂ
Crocs is cheap enough to be a takeover target for Deckers or private equity: 2026 EPS guidance of $13.20-13.75 puts it at about 7.3x adjusted earnings, and it bought back 10% of shares over the past year. It beat and raised, with the Crocs brand down 1% and HeyDude down 13% in a reset. Skechers was bought out last year at 8.6x EBITDA, equal to $144 for Crocs. A 30-40% premium could suffice since management lost credibility after overpaying for HeyDude. x.com x.com x.comÂ
Deckers' lowered FY27 revenue guidance adds evidence of slowing growth behind the value-trap concern. Guidance is now $5.70B-$5.725B, down from $5.86B-$5.91B and below the $5.88B estimate; the stock trades at about 10 times next-twelve-month earnings. x.comÂ
Deckers looks exposed to sector-wide discounting, as a struggling Nike is about to drag down the whole footwear sector with promotions. The lowest Street price target on Deckers was cut to $70, a bad sign, since an analyst is unlikely to turn bearish without good information. x.com x.comÂ
Deckers Outdoor is a decent safety play as a very profitable business trading at a low multiple, now with a buyback authorization of up to 33% of its market cap. Growth was somewhat slower than expected and guidance is mediocre, but a return to growth could make the stock jump. x.comÂ
Nike is still super expensive even if it pulls a magic trick on margins, and the stock has been a buy-the-dip nightmare because the brand became uncool. It can keep existing while slowly fading, which is a terrible investment case. x.com x.comÂ
