SRG's Flickinger: More Trouble Ahead in Athletic Retail (Audio)

Executive Master in Cybersecurity Strategy is the best security. Now let's head over to the First Word Breaking news desk for today's afternoon call. Here he is Bill Maloney. Good afternoon, Charlie. Turnaround for U S stocks after a week open Dallas currently hired by ten points. S SPEs Game three in NAZAC rises six at one point to Dallas down a hundred and twenty two. The small cap six hundred rises four points US ten yield at one point eight five

per cent. Six out of tennis B sectors are higher, led by gains in staples, healthcare, and the financials. Telecom and consumer discretionary led to the downside down Transports drop thirty one as a by text gain twenty two and

the VIX is higher by one percent. Down Leaders to the downside included Verizon, Apple and Disney, DuPont and Proctor and Gamble led Michael Cores gained seven percent after earnings, Hull Foods Are Always five percent was upgraded over at Traded Sweez, while under Armour fell as much as six point three percent after cutting its net revenue outlook live in the first Breaking news desk on Bill Maloney, Charlotte,

all right, hey, thank you very much, Bill Maloney. We've got a nup date for stocks to hear live breaking news over your Bloomberg type squawk sq you a w K on your terminal. I'm Charlie Pellets and that's a Bloomberg business flash. This is taking stock with Kathleen Hayes and Pim Fox on Bloomberg Radio. The bankruptcy of a retailer words authority is not only affecting that company, it's reverberating throughout the market for footwear and other kinds of

athletic apparel. Because today under Armour cut its annual forecast, signing the demise of one of its largest customers. And now Nike was downgraded by Morgan Stanley and Bank of America Merrill Lynch. So the troubles are piling on. We see those stocks lower today, Nike downpoint four at about fifty four dollars in ninety eight cents a share, with under Armour losing three point seven percent, trading at thirty

six dollars and change. So what's next. Bert Flickinger joins us now he's managing director at Strategic Resource Group here in New York City. Uh. Were you anticipating something like this for the likes of under Armour and Nike? Definitely, Kathleen, because the profit margins and the prices are too high, that demands too low, and it goes far beyond the bankruptcy sports authority. So is sports authorities bankruptcy and under

Armor cutting it's annual forecast. Actually that happened day yesterday. Citing the bankruptcy of sports authorities. That just an excuse on under ours part. It's an excuse. It's retail reality, but it's it's also Uh, there's a real issue in

terms of lack of breakthrough marketing. If you if you look at the history of the big sports brands, when you had Jim Mullen and Paul Silverman doing breakthrough advertising for Reebok, Dan Widen Wide and Kennedy working with Liz Dolan and Joe McCarthy and Phil Knight doing the same for Nike and i Q and Jay doing the same thing for a converse. That created a lot of excitement, And now that excitement is there because the agencies are

really struggling to create consumer demand. And with all the scandals and sports UH, fewer, fewer people are watching sports UH and unfortunately more people are eating UH and playing

with their mobile devices than participate hating in sports. And when less sports participation comes less demand for under Armour, Nike, and the category dominant sports retailers starting with a sports authority Eastern Mountain Sports and Sports ul A, which Bloomberg's All reported a filed for bankruptcy during the last fifty days. Steph Curry has had a terrific series so far, going

into the NBA Finals the playoffs. That was that was quite a move for the Warriors versus the Oklahoma City Thunder. But you say he can't really save companies like under Armour and Nike amid other stars scandals. Uh, Steph can't do it by himself. He's tremendous young man on a three sixty degree basis, just a superb person personally and professionally.

But on the other hand, UH, Nike's had scandals with Johnny no NFL football Man's Elmanni Pack, Michael Vick, Oscar Victorious, Ray Kao, Rice John Jones of the US see Maria Sherpo in tennis, so Tiger Woods and golf. Uh So it's almost in syriantum the number of scandals, and then the team scandals with the Russian athletes. It's turning people

off for the Brazil Summer Olympics this summer. UH their scandals associated with the World Cup and football or what the US is called soccer UH and and its result, you're you're you're seeing less interest, particularly amongst millennials, and millennials are key to driving the future foundation for brands like under Armours, Well it's Nike. And the less key footnote is UH that Phil Knights almost like the UH

sports marketing reincarnation of Genghis Khan. He's laid waste to every competitor from Converse to Umbro to Rebok and to some extent Audi DA's and there's very little for Nike and under Armour it's still conquer so with the climbing demand, it's tough to get accelerating growth. Both companies still have some growth, but it's not the double digit growth that people had come to expect from both the market leaders. But you see also this is part of the retail

ice age. It seems we've got two forces. The retail ice age would you say will be done by But then you're also talking about millennials not being into sports as much and and not not participating as much because of surprises me because I've got a millennial in my house. She grew up playing a lot of sports. But where does this leave these these big companies then, like under

Armour and Nike, which force predominates. And studies have been published that millennials check their checks or her mobile devices a hundred plus times a day to check on Facebook and other digital social connective media. So while that's going on, UH, fewer people are outdoors also with the cutbacks and public funding and uh, community college and high school and and can I jump in really quick at leisure, everybody sneakers and they update them all the time. Stylish sneakers. That's

a big thing for millennials. Stylish sneakers are completely correct athlete uh color colors are real breakthrough. That's that's why Sketchers is done so spectacularly well in recent years. And UT Cornell Institute for Fashion and Fiber Innovation, they're they're working with Sketcher's, Nike, uh Umbro, Umbro and others. So innovation and color will will drive demand. But overall the

trends are softening, and that's somewhat concerning. Bird Flickinger, Managing director is Strategic Resource Group talking about Nike and under Armer stocks getting hit by the Sports Authority bankruptcy. This is Bloomberg Radio. Bloomber Taking stock is brought to you by S. S and C. More experience, superior technology, dependents, and expertise. That's how S. S and C drives the future of fund administration. S S and C. They are the future of fund administration. Like