Puma Posts $156.8M Q4 Loss

The German activewear firm said full-year net earnings slumped 92.4 percent.

PARIS — Puma remains under pressure.

This story first appeared in the February 21, 2014 issue of WWD.  Subscribe Today.

The German activewear firm, which is controlled by French group Kering, reported a fourth-quarter net loss of 115.2 million euros, or $156.8 million, down 170.3 percent versus the same prior-year period.

Impacted by negative currency effects and high comparables, the company said sales in the three months ended Dec. 31 slumped 13.2 percent to 698.3 million euros, or $950.31 million, versus 804.7 million euros, or $1.04 billion, in fourth-quarter 2013.

Dollar figures are converted from the euro at average exchange rates for the periods to which they refer.

Broken down by product segment, only accessories sales grew, by 10.6 percent, while footwear and apparel fell by 12.9 percent and 1.1 percent, respectively.

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All regions registered single-digit declines. “Strong growth” was noted in Russia and Turkey, but that was not enough to offset business in Western and southern Europe.

In full-year 2013, company net earnings dropped 92.4 percent to 5.3 million euros, or $7 million.

Speaking at a press conference on Thursday at headquarters in Herzogenaurach, Germany, company chief executive officer Björn Gulden said that “2013 [was] a challenging year for Puma, and there is no doubt that we have issues in terms of lack of brand heat, commercial products and desirable distribution.”

Gulden presented a long list of changes he envisaged for the current year and beyond.

“This is not a quick fix, but 2014 marks the start of the turnaround,” he said. Gulden explained this turnaround would be “fueled by Puma’s biggest media investment in the last decade,” a large-scale advertising campaign thought up by New York-based JWT, scheduled to launch in August.

Although the executive would not reveal how much the company spent on the new marketing strategy, he said it was cutting back in other areas to balance spending. For instance, the firm has decided to exit European rugby and sailing. Instead, it will concentrate on soccer, running, training, motorsport and golf — the latter of which has grown especially.

Continuing with last year’s strategy, Gulden said there would be more streamlining. Eighteen Puma stores deemed unprofitable are to be closed in 2014, while new units will open in emerging markets. Also this year five European warehouses are set to close. And by 2015 the objective is to reduce article count by 30 percent.

But Gulden said what the company most needed was “time.” For this year, he projects flat sales.

“Net sales will be a little down in the first half and a little up in the second half,” while gross margin is expected to “improve slightly,” he said. “Obviously these numbers are not our end game. We should start growing again in 2015.”

For more visibility, Puma intends to rely on what it terms its “great assets,” which are ongoing partnerships with top athletes, including the world’s fastest man, Usain Bolt, and star soccer striker Mario Balotelli, as well as Puma’s most recent coup — a deal with Arsenal AC, which it snapped up from Nike.

Yet wholesale remains key to Puma, given it generates 80 percent of its business, according to Gulden, who referred to “a whole package” of product launches slated for the first week in March.