With Puma’s turnaround taking shape slowly but surely, chief executive officer Bjørn Gulden remains optimistic about the future despite ongoing economic and political turbulence.
“Based on everything we think we can count on,” net earnings are expected to “improve significantly” this year, he said during a press conference Thursday at the firm’s headquarters in Herzogenaurach, Germany, that was live-streamed on the web. “The uncertainties when it comes to the flow of product are big, there are many [issues at stake], but we are prepared for the [various outcomes].”
In 2017, the company forecasts currency-adjusted net sales will increase at a high-single-digit rate, but operating expenses should continue to rise due to further investments in marketing, updating and expanding retail stores, and in IT infrastructure.
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“We feel we [are gaining] momentum,” continued Gulden, adding that the plan going forward is to continue to “over invest” in marketing and retail. The recruitment of high-profile ambassadors including Rihanna — who will present her third Fenty Puma collection in Paris next month; Cara Delevingne, and Kylie Jenner, the face of the brand’s Fierce trainer, continues to bear fruit, especially in terms of image, he said. (Jenner alone boasts 85.4 million followers on Instagram.) “Now it’s all about content, content, content and ambassadors, and having stories to tell. There have been enormous shifts in what we spend money on,” Gulden said.
Sales on the Fenty Puma Creeper show “no signs of slowing,” he said, with the velvet model released for the holiday season selling out within three hours on the brand’s site. Women’s collections are among the best performers in terms of sell-in and sell-through, with many retailers making space for its female collections, the brand said.
Having tapped R&B star The Weeknd to front its spring “Run the Streets” campaign, Gulden said the aim, in Puma’s mission to become “the most fashion-forward global sports brand,” is to generate equal fizz with its male ambassadors. But despite a growing crossover between sports and fashion, the main focus in terms of investments remains sports, with soccer its core category, he stressed.
The executive flagged Kemar Bailey-Cole as one to watch from seven freshly signed young Jamaican athletes, though he believes the “value” of the brand’s longtime collaboration with athlete Usain Bolt could become even more powerful once he decides to hang up his spikes as he’ll be more available for projects. “I see him being visible for many years to come.”
Sales at Puma rose 9 percent to 958.2 million euros, or $1 billion, in the three months ended Dec. 31, boosted by strong sell-throughs on new product launches like the Fierce, Basket Heart and Ignite Dual styles and the Fenty Puma by Rihanna collection.
The sporting goods firm recorded a net loss of 4.6 million euros, or $5 million, versus a loss of 4.3 million euros, or $4.7 million, during the same period a year earlier, impacted by adjustment of tax provisions.
The gross margin — a key indicator of profitability — rose to 44.6 percent from 42.7 percent in the prior-year period, while earnings before interest and taxes jumped 30.2 percent to 14.1 million euros, or $15.20 million.
For the full year, net profit jumped 68 percent to 62.4 million euros, or $69.1 million, on sales that increased 7.1 percent, or 10.2 percent on currency-adjusted terms, to 3.63 billion euros, or $4.01 billion, boosted by sales of replica soccer jerseys from the UEFA Euro 2016; the Rio de Janeiro 2016 Summer Olympics, and the robust women’s category.
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In terms of markets, sales in the EMEA region in the full year showed the highest increase, up 9.9 percent to 1.4 billion euros, or $1.55 billion, led by Germany and France. Gulden also cited a “surprisingly strong” performance in Russia.
The Americas — especially Argentina — saw strong double-digit growth in spite of devalued currencies. In Asia, strong double-digit growth in China and India helped offset a “flattish” performance in Japan and Korea.
The brand saw a “big pickup” in the U.S. over the last four to six months, Gulden said. When asked if he was concerned about the U.S. market weakening, or the ath-leisure trend going out of style, in view of the poor fourth-quarter performance of competitor Under Armour, he replied: “We are not concerned, as we are coming in from a low base.”
Addressing rumors that parent company Kering is looking to sell its stake in Puma, Gulden said that he couldn’t speak for Kering but that Puma has a “good relationship with the board” which has “allowed us to build an infrastructure and to overinvest in marketing and retail to turn the brand around.”
New retail developments underway include a fledgling concept store that recently opened in Madrid and will likely be rolled out — “we will probably see more of these modern stores in key locations as they are working well” — and a new, modernized outlet concept, which just debuted in Rodengo in Italy.
Sneaker launches for 2017 will include the Netfit shoe with a mesh upper and new lacing system; a minimalist series in the brand’s “Run the Streets” line dubbed Tsugi Shinsei, and a velvet women’s style called Velvet Rope in olive and copper.
The brand will also release its third collection with Trapstar, a London-based street style brand frequently worn by Rihanna. The collection is inspired by soccer and features the Puma Cell Bubble shoe with 3M laces and Trapstar branding on the heel and insole and a soccer jersey with Puma’s Dry Cell technology. The line will be released exclusively on Trapstar’s e-commerce site on Friday and globally on Feb. 18.