Helped by endorsements from Rihanna and Kylie Jenner, German sportswear maker Puma "is in comeback mode," according to Richard Weiss of BLOOMBERG. Its "profits are reviving and its shares are surging" -- a "mirror image" to similarly-sized U.S. rival Under Armour, which is "reeling from a sales slowdown and a stock slump." Puma's "celebrity-fueled approach was its Achilles heel a few years ago," when the company ventured beyond its football roots into the world of fashion, "alienating consumers looking for more down-to-earth sporting gear during the financial crisis." Some turned to Under Armour, "attracted to the newcomer's performance-over-glitz approach." Now, consumers are "increasingly wearing their workout clothes beyond the gym" -- to the coffee shop, book clubs and trips to the mall to stock up on more "athleisure" apparel. While its profit margins are "nowhere near" the 20%-plus levels Puma once achieved, its shares are up more than 30% over the last six months, "during which Under Armour has lost half its value." Bloomberg Intelligence analyst Chen Grazutis said, "We often refer to these companies as athletic brands, but the truth is that now more than ever it's all about fashion. The vast majority of people buying sneakers don't even use them for their intended purpose." Puma is still trading below the €330 ($349.32) per share that luxury-goods maker Kering paid for a majority stake in '07, and some analysts said that the shares have been "lifted by speculation that the Gucci owner may eventually sell its stake." As Puma reorganized, Under Armour investors were "richly rewarded" from '11-15, with a fourfold gain. The U.S. company's stock has "plunged" since then, with "downward momentum accelerating since it reported disappointing earnings in January" and CEO Kevin Plank citing an "insufficient focus on fashion." Days later, Puma reported '16 sales and earnings that "beat analyst estimates" and said that it expected operating profit in '17 "to grow at least as fast" (BLOOMBERG, 3/6).
