ATZ is in the doghouse for two main reasons. First, growth has started to slow. The consumer is feeling the impact of higher inflation and it shows in the numbers. The company has missed estimates in several quarters now. But, likely more impactful, inventories have risen. In the fashion/retail world, if inventories are too high then they usually result in mark-downs. This impacts financials of course but also impacts the 'brand'. Management had indicated it was deliberately raising inventory in anticipation of growth, and then the growth did not occur, so this gave managment (previously loved) a bit of a credibility gap. We think any uptick in growth or downtick in inventories would help the stock. It basically needs to promise less and deliver more. It could also increase store openings to speed growth, or pay down some debt. We think it is OK, longer term, and sentiment is so low right now any good news would likely have an amplified effect on the stock.
5i Research Answer: