• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Cramer: Don't Judge Nike, Foot Locker and Under Armour in Short Term

There are too many variables and too many shareholders itching to run.
By JIM CRAMER
May 24, 2016 | 06:35 AM EDT
Stocks quotes in this article: NKE, FL, UA, ADDYY, TJX

What happens if the Golden State Warriors lose?

In a moment of intense pain and anguish over trying to figure out the valuations of Nike (NKE), Trifecta Stocks portfolio holding Foot Locker (FL) and Growth Seeker portfolio name Under Armour (UA), I found myself wondering: what would happen to these stocks if Steph Curry, the putative greatest player ever and the man who wears the hottest basketball sneaker out there, the Under Armour shoe, didn't make it to the finals? What happens if Kevin Durant, Russell Westbrook and the Oklahoma City Thunder actually beat Golden State and Curry just goes home a loser? Would Under Armour's stock get hammered?

Then I said to myself, wait a second, if the valuation of a company's stock is determined by whether a team wins or loses in the NBA Western finals, count me out. There's just way too many variables.

And that's how I feel right now about the footwear and sports apparel group. I have never seen it in this state of flux, and while opportunities may abound -- and I like Under Armour, Nike and Foot Locker -- this group has just become too hard to reconcile.

Think about it. Nike reported a quarter with guidance that no one really liked and its stock has been headed down ever since. Under Armour reported a similar quarter, with lots of worries about excess inventories, something that makes sense given that The Sports Authority just shut down. Foot Locker reported a quarter that it may have liked, but it is the only one who did.

In fact, when I went through the conference call there was an Alice in Wonderland feel to it, to some degree just psychedelic in how well the company thinks it is doing vs. the reality, at least for now. I found myself thinking, maybe I am nuts about how bad this number is vs. what I was looking for, and I should go ask Alice, when she is 10 feet tall, whether she would buy Jordans or Kobe's or Currys or, worse, something from Adidas (ADDYY), which is suddenly making a comeback. We had presumed that company dead and buried, but now it's back.

To make matters worse, the shorts are climbing all over this group. Yesterday, with so many people wondering why the stock of Under Armour was so weak, I just decided to go to TJ Maxx (TJX) and take pictures of all of the remaindered UA socks they had. That was easy enough. But the problem is that there have always been remaindered UA socks on those racks; it just didn't matter when the stock was going higher.

So what's really going on here? I think that the whole group has become "show-me," meaning that we need clean quarters from all of the players and more important, the bar has been raised, not lowered by all of this chatter. As Matthew Boss from JP Morgan put it best, writing about Foot Locker: "three pointers and lay-ups now required," if the second half is going to produce upside.

Sometimes, we just have to admit that short term we have a battleground. Maybe Nike's sales are weaker at Foot Locker because Nike's having so much success in the direct-to-consumer channel. Maybe it doesn't matter if Curry wins, because Under Armour is successfully transitioning to a health and wellness company. Maybe Foot Locker isn't being "mauled" by the mall and just has some difficulty with its Nike inventory.

Whatever. If you don't take a long-term view on these companies, you are going to drive yourself crazy. They can't be judged short term, as there are too many variables, too many smart people on all sides and too many shareholders itching to run.

Best to buy the shoes, wear 'em, stay in shape, and wait until the three pointers begin.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

TAGS: Investing | U.S. Equity | Consumer Discretionary

More from Consumer Discretionary

Our Latest Ulta Beauty Technical Strategy

Bruce Kamich
Mar 2, 2021 11:55 AM EST

A bearish divergence could foreshadow price weakness ahead.

The Sagas of a Cruise Operator and a Burger Joint Continue

Jonathan Heller
Feb 24, 2021 10:00 AM EST

Carnival Corp. continues to sell debt and equity as it works to stay afloat, while Steak n Shake deals with problems of its own.

A Furniture Seller and Footwear Retailer With Room to Run

Bret Jensen
Feb 24, 2021 8:46 AM EST

Hooker Furniture and Foot Locker recently raised their dividends and could provide more upside to buyers of the shares in the months ahead.

DoorDash's Charts Tell Me to Stay Near the Exit Door

Bruce Kamich
Feb 22, 2021 8:55 AM EST

Buyers of DASH are not being aggressive.

Ruth's Hospitality Group Serves Up Medium-Rare Charts

Bruce Kamich
Feb 19, 2021 8:28 AM EST

The pace of the advance in the steakhouse operator's shares has been slowing and volume is shrinking, too, so be cautious.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:53 AM EST GARY BERMAN

    Nasdaq Composite: Some Backing and Filling Is Here

    As today is the 4th day of the month, it seems lik...
  • 07:59 AM EST PAUL PRICE

    Fabulous News on United Natural Foods (UNFI)

    The major potential risk factor for , its contrac...
  • 08:50 AM EST PAUL PRICE

    Michaels: Close to a Deal?

    It appears that a deal could be announced soon. ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login