Puma Raises Forecast as Turnaround Progresses

GENEVA, Switzerland — Puma raised its 2017 earnings forecast as chief executive officer Bjoern Gulden's turnaround efforts boost sales, another sign that Nike Inc. faces stronger competition from German rivals that have been faster at tapping trends in athletic fashion.

Operating profit should reach €185 million ($196 million) to €200 million after first-quarter sales rose at the fastest rate in almost two years, the Herzogenaurach-based company said Wednesday. The stock rose as much as 5.1 percent to the highest in almost a decade.

“The much stronger sales development has finally started to translate into improved profitability, which remaining at depressed levels is Puma’s big opportunity,” Zuzanna Pusz, an analyst at Berenberg, said in a note.

Puma is in the fourth year of a turnaround, balancing sportswear and street styles with the help of endorsements from celebrities including sprinter Usain Bolt and singer Rihanna. There's been a resurgence as well at crosstown rival Adidas AG, which last month raised its forecasts through 2020 as it boosts investment in the U.S. That spells trouble for Nike, whose shares fell the first time in eight years in 2016 as it lost market share.

Puma’s first-quarter operating profit rose about 70 percent to €70 million, the company said Wednesday in an unscheduled announcement of preliminary earnings. Sales rose 15 percent in local currencies to €1 billion. The company, which will report full results April 25, forecast revenue will increase by at least 10 percent this year, excluding currency swings.

Puma previously predicted full-year earnings of €170 million to €190 million and a single-digit increase in sales.

The shares climbed 5 percent to €327.65 at 10:15 a.m. in Frankfurt, giving the company a market value of €4.9 billion.

By Thomas Mulier; editors: Eric Pfanner and Paul Jarvis.