Working to be winners.
For generations, investors have relished playing the market, though they regard it as much more than a friendly joust. The same goes for investing in companies that make their name, and their profits, through athletic apparel products. But winning teams are tricky to build; macho market analysts might dismiss you even when famous athletes endorse you. And is it even possible to make a game-winning shot in the increasingly endangered space of the brick-and-mortar shop? The companies on top might surprise you, while some associated with burnished gym bodies are really 98-pound weaklings in disguise.
While the roster at Under Armour includes Super Bowl quarterback Tom Brady, its performance has been more toilet bowl — down 56 percent year to date and trading at $13. “It’s the worst-performing S&P 500 stock this year,” says Bob Johnson, president and CEO of the American College of Financial Services in Bryn Mawr, Pennsylvania. “It doesn’t pay a dividend and sells at a trailing price-to-earnings ratio of 36. For that kind of performance they should get first pick in the draft.”
Columbia Sportswear Co. (COLM)
“By intensifying the focus on the consumers, Columbia is trying to maximize how consumers perceive each of its four brands,” says Christopher Ma, director of the George Investments Institute at Stetson University in DeLand, Florida. And in Europe, Columbia’s gambits are paying off, “with sales increasing by 20 percent in the last quarter as a result of direct-to-consumer and wholesale sales doing incredibly well.” That’s helped lead to another healthy jump: COLM is up 23 percent this year.
Gildan Activewear (GIL)
This Montreal-based company produces blank active wear for screenprinting — but feel free to stamp dollar signs on it. Up 25 percent this year, GIL has fared much better than its fancier competitors. “On Nov. 2 it announced quarterly earnings of 53 cents per share, a positive surprise of 3.3 percent above the consensus,” says Bora Ozkan, assistant professor of finance at Temple University’s Fox School of Business in Philadelphia. “The company has reported positive surprises the past four quarters.”
Finish Line (FINL)
“Finished Line” might be more like it. The company’s brick-and-mortar doldrums have led to a 53 percent drop from this time last year. “There’s been a steady growth on the e-commerce side but it only accounts for 17 percent of sales,” Ma says. “Retailers that cater to online shoppers are having better luck at reaching consumers than the majority of Finish Line stores.” So what could turn FINL around? “The ability of the store to connect with millennials,” Ma says.
Foot Locker (FL)
“Historically, Nike (NKE) used Foot Locker as its primary footwear distribution network, offering product exclusivity, early delivery and favorable pricing and conditions,” Ozkan says. Then came the summer, when Nike agreed to sell through Amazon.com (AMZN). So while FL remains several steps ahead of Finish Line, they’re stumble steps at best. The New York-based retailer is off 40 percent this year and 2018 will see the company pushing to shorten product development cycles while cutting its spending 10 percent.
Fitbit (FIT)
Since going public in June 2015, Fitbit hasn’t capitalized on its robust share of the wearables market — or maybe it just needs to check its pulse. The stock has lost 85 percent from its July 2015 high of $47.60. Now trading at just less than $7, Fitbit lost 14 percent in 2017 alone. Hopeful-but-cautious investors now track FIT’s every step. Ten Wall Street analysts call it a “hold,” with one each calling FIT a “buy,” “strong buy” and an “underperform.”
VF Corp. (VFC)
Along with its wide range of brands from The North Face to Vans, VFC “really focuses on taking an active role in promoting a very active lifestyle, which consists of documenting the consumer experience with many of its products,” Ma says. Then there’s the investor experience, which proves equally invigorating. VCF is up 37 percent this year, and 85 percent over the last five years. But it’s also committed to staying trim by selling off its Majestic and JanSport labels.
Lululemon Athletica (LULU)
Fans love Lululemon, as the Canadian company’s red totes are legion: festooned with quotes such as “friends are more important than money.” But try telling that to shareholders, who saw LULU plunge 23 percent on March 29, when the yoga apparel company released mixed fiscal fourth-quarter results and disappointing forward guidance. Since then, LULU has recovered from its downward position, rising 32 percent to $67 per share but still flat for the year.
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Finish First With Athletic Apparel Stocks originally appeared on usnews.com
