By  on July 29, 2014

PARIS — Puma SE continues its rocky road to recovery.

The German activewear firm, whose earnings and sales continued to slide in the second quarter of 2014, said it was eager to launch the largest global marketing campaign in its history, hoping to finally turn around its fortunes.

“It’s a 360-degrees concept, including retail, social media, digital and print. The first TV spot will air on Aug. 7,” Björn Gulden, Puma’s chief executive officer, said during a conference call Tuesday.

“And it’s just the beginning,” he continued, adding the campaign, dubbed “Forever Faster,” was “a long-term project with continuous investment up to the Olympic Games in Rio de Janeiro in 2016.”

Although Gulden would not disclose the company’s marketing expenditures for this undertaking, he said they were going to be “considerable” and “much more” than what Puma had spent in the past.

Featuring a fleet of the brand’s top athletes and testimonials, including Usain Bolt, Mario Balotelli and Lexi Thompson, the campaign is slated to be launched in North and South America as well as the Asia-Pacific region first, before rolling out to Europe and the rest of the world.

“This has to do with the fact that the back-to-school season starts at different times in different regions,” the ceo explained.

Gulden said the campaign’s main message would be that Puma is back.

“We want to show that Puma has cool and good athletes. And we want to combine personality and attitude with products,” he explained.

In the immediate aftermath of the FIFA World Cup, Puma SE said second-quarter net profit was down 76.2 percent. The company, which is controlled by French group Kering, said the result was in line with expectations.

Negatively impacted by volatile currencies in several key regions including Russia, Turkey, Japan and the Americas, net earnings stood at 4.2 million euros, or $5.8 million, in the three months ended June 30, versus 17.5 million euros, or $22.8 million, in the year-ago period.

Total sales for the quarter were down 5.8 percent to 652.2 million euros, or $894.6 million. Dollar figures are calculated at average exchange for the period to which they refer.

“I have said all along: We know that the repositioning of Puma and the turnaround of the business will take time. However, I feel we are making progress on all our key strategic priorities and we have initiated the right projects to make 2014 the start of the turnaround,” Gulden assured.

He said both the brand’s dual-colored Tricks football boots and its national team jerseys with ACTV technology have had “excellent” sell-through and exceeded expectations.

“They almost sold out everywhere. It’s what we call a fast design,” he said. “In addition, we celebrated a successful Arsenal launch in July, followed by very good initial sales at retail of Arsenal replica jerseys.”

However, only apparel showed a significant sign of improvement in the second quarter, growing 12.8 percent thanks to World Cup-related sales. By contrast, footwear dropped 9.1 percent, while accessories, hindered by declining golf equipment sales, were up 3.4 percent, which is less than in the same quarter last year.

Gulden maintained he felt “comfortable in confirming our guidance,” which projects flat full-year currency-adjusted net sales and a 3 percent increase in net earnings.

The “Forever Faster” offensive is also expected to boost confidence among retailers, who have been reluctant to give retail space to Puma, favoring Adidas and Nike over the struggling activewear firm.

Gulden said the company is channeling its efforts toward improving distribution by teaming up with key retailers to develop joint products and marketing programs, citing Foot Locker as an example where it worked.

He said business with Foot Locker had been declining until Puma launched the “Puma Lab” initiative in February, increasing its presence to 126 doors in the U.S. and generating “a positive spillover effect” to other key retailers in the U.S.

Consequently, second-quarter sales in the Americas improved 4.6 percent, while in the EMEA (Europe, Middle East and Asia) region they dropped by 1.4 percent due to declining wholesale revenues in France and Scandinavia.

Following the Foot Locker example, Gulden said he was hoping to initiate the same “U-turn” with France’s largest sports retailer Decathlon, which lost its confidence in Puma, according to the ceo.

“It’s about trust. We need to convince them with a new positioning and new products that they need Puma,” he argued.

Puma appointed Lars Soerensen as its chief operating officer. Soerensen, who joined the company from Bestseller in November 2013 after holding other managerial positions at Esprit, Adidas and Lego, will succeed Andy Koehler. Considered a key figure in rebuilding the company, Koehler is said to be leaving Puma for personal reasons, effective Thursday, just a year after taking up the post.

Gulden neither confirmed nor denied German newspaper reports that Puma is looking to diversify its business model and take a stake in Borussia Dortmund, Germany’s only publicly traded football club.

“Because it’s publicly traded, we can buy shares at any given time, and if we buy a bigger amount, we will talk about it. We do not hold any shares at the moment, but I cannot tell you what will happen tomorrow or the day after,” Gulden said, fielding recurring questions on the matter.

He added: “The sports industry is evolving. When big football clubs offer their shares, you have to look at it strategically, and that’s we are doing.”

Puma SE’s own shares closed at 202.45 euros ($271.49), up 1.9 percent, on Tuesday, reflecting the company’s optimism about its future progress.

 

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