Mr. Maher: In terms of apparel, the companies that I'm covering at present would include Volcom (VLCM), a board sports apparel company — surfboards, skateboards, and snowboards. I also follow Zumiez (ZUMZ), which is a retailer in the same category; they do have some of their own private labels, so they're both a retailer and a producer of their own goods. Quiksilver (ZQK), which is also in that same category, is really a global player; Volcom is more of a US player and Zumiez is exclusively US. In terms of footwear, I'm covering Crocs (CROX), which I think are in a category of their own. It's not a shoe, it's not a sandal, it's a Crocs. Under Armour (UA) I would include as a footwear company more for what it's becoming than what it currently is; they do offer cleats right now, but they're moving into, in the springtime of 2008, a cross-training shoe and they've indicated plans to expand beyond that to other athletic footwear. So I would include Crocs and Under Armour as the footwear companies I follow.
TWST: As you look at the space, how have the companies performed from a business
perspective so far this year, relative to your expectations?
Mr. Maher: I'm glad you phrased it that way because the stock prices recently
have been very volatile, to say the least, and the mood on the consumer in the
market has been certainly unfavorable. But both Crocs and Under Armour, if we
talk about footwear first, have had very strong results; they have beaten their
own guidance. In the case of Crocs, I think it's especially noteworthy that
their global sales in the third quarter eclipsed their US sales for the first
time ever, and they're accelerating very rapidly. So I think Crocs, if we just
look at the business and step away from looking at the stock, the core offering
that they started the company with, the classic models, the beach and cayman
continue to sell well, but the new products that they've introduced, especially
most recently the mammoth, which is a Croc but it's a lined shoe with fur
lining, are selling exceptionally well. I think that the Crocs are continuing to
do very well in the US, but they also are taking hold overseas both in Europe
and in Asia; the sales growth has been very strong. With Under Armour, it's a
bit of a seasonal thing right now as far as sales. Their sales in the third
quarter were small — of their footwear principally because it's seasonal in
terms of the sports that they're looking at, which would be football, baseball
and to a degree lacrosse. The excitement is building, though, about the Under
Armour offering for the spring when they get into the cross-training shoes. So
business in general for the apparel is exceptionally strong. All three
categories with a breakout in men's, women's and children's, or youth as they
refer to it — most recently sales were up more than 40% in all three categories.
That's very strong growth from very strong demand for the product.
Tickers included in this excerpt: CROX, UA, ZUMZ
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.