Overheard On Wall Street: Under Armour & Steve Madden

Under Armour Inc.

The Baltimore-based footwear-and-apparel brand’s two-for-one stock split resulting from the creation of a new Class C nonvoting stock took effect on Friday.

Under Armour announced in March that its board of directors approved the offering of the new Class C nonvoting common stock, which would be issued through a stock dividend on a one-for-one basis to all existing holders of Under Armour’s Class A and Class B common stock, having the same effect as a two-for-one stock split.

In June 2015, Under Armour Chairman and CEO Kevin Plank first announced the creation of a new nonvoting Class C common stock. At the time, insiders called the decision a “power move” on the part of Plank, noting that the nonvoting clause allowed the CEO to maintain a stronghold on the firm.

Sterne Agee CRT analyst Sam Poser adjusted his estimates and targets for the brand to reflect the change and maintained a buy rating on the stock.

“We are adjusting our FY16 and FY17 EPS estimates from $1.29 and $1.73 to 64 cents and 87 cents to reflect the creation of the Class C non-voting stock,” Poser wrote today. “Our price target is now $60 ($120 prior).”

Steve Madden Ltd.

The fashion-footwear maker announced today that it would release first quarter earnings on April 22.

CL King & Associates analyst Steve Marotta maintained a neutral rating on the stock in a note earlier in the week, citing a “strong category but, a strong stock.”

“With the wholesale channel comprising 85 percent of the total consolidated sales mix in Q1, combined with the fact channel-wide open-to-buy budgets are running lower than last year, even an outperformer like Steve Madden will be challenged to eke out positive sales growth (excluding company-owned retail units,” Marotta added. “The good news is that inventory in the channel is relatively clean, the women’s fashion footwear category seems to have stabilized, and promotions in the quarter do not appear to be accelerating.”

Marotta said he expects full-price sell-through to be a positive call-out in Q1, while gross margins should benefit.

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