PARIS — Following a successful launch of its Forever Faster campaign and expensive sponsorship deals, which in total cost the company an undisclosed eight-figure sum, Puma still has “one major issue,” acknowledged its chief executive officer Bjørn Gulden, “and that’s women.”
Speaking during a live Webcast on Monday, following the release of the activewear firm’s full-year results, Gulden recognized the women’s category was still a long way from its potential, despite a surge of female customers stepping into the active sports arena.
Gulden let it be known he was betting his cards on Puma’s new brand ambassador and creative director of the women’s fitness and training line — singer Rihanna, who had her first creative session with the firm’s design team in December, as reported by WWD on Dec. 16.
The executive revealed, while limited editions created in collaboration with the singer would trickle through, the first women’s training collection actually codesigned by Rihanna would be ready for 2016. The first campaign fronted by the multitasking Grammy Award winner and CFDA fashion icon, meanwhile, is slated to hit newsstands in the fall.
“I am often asked why an artist and not an athlete,” Gulden said at the conference, explaining: “We couldn’t find an athlete that would open all the doors.”
Rihanna’s millions of followers on social media, her fashion-savvy aesthetics and overall fitness level were a reflection of the image Puma was eager to get across. Gulden remarked that people often overlooked how much artists have to train “to survive in the industry.”
Puma’s choice to employ a musician instead of an athlete is also a sign of the firm’s determination to hold on to its lifestyle vision, which has previously gotten the company into trouble. But the ceo upheld: “Sports has a huge influence on lifestyle. Athletes and entertainers are fashion and lifestyle icons. I have three kids and they are affected by three things: Music, sports — and that damn computer,” he said, suggesting that the lines between those categories have blurred. “When you have a performance shoe that is worn on the street, then you won. And Puma is a sports brand that caters to the streets.”
The Herzogenaurach, Germany-based firm said consolidated sales rose 6.3 percent in currency-adjusted terms in the fourth quarter, driven by a “remarkable growth in accessories” (up 17.1 percent), further recovery of the footwear category (up 4.3 percent) and stronger demand in the Americas, which rose 15 percent.
Total sales stood at 750.8 million euros, or $938 million, during the three-month period ending Dec. 31, which was in line with expectations, the company noted.
Operating profit, meanwhile, amounted to 10.6 million euros, or $13.2 million, compared with a loss of 127.9 million euros, or $174 million, in the same quarter last year.
For the full year of 2014, Puma registered sales of 2.97 billion euros, or $3.95 billion, up 3.3 percent on a currency-adjusted basis, while operating profit stood at 128 million euros, or $170 million.
Gulden said the first product endorsed by Rihanna would be Ignite, a running shoe that promises maximum energy return and was launched for men by Usain Bolt in New York last week.
Women were not the only topic on the executive’s mind. Currency issues were just as pressing, and nowhere were they felt more than in Russia.
“We had a currency-adjusted growth there of 27 percent in Q4, but we reported minus 13 percent. It’s unfortunate to have these kinds of impacts,” lamented Gulden.
To support a slight increase in net earnings, the company has taken countermeasures, most notably price increases and a slower shipment of orders, which are not likely to generate a positive sell-through. “I can tell you, actual sales in Russia were positive until the first week of January, but went down after Christmas [celebrated by Russians on Jan. 6]. It was pretty dramatic,” Gulden divulged.
Exchange rates are likely to continue causing headwinds. “We can talk about a midsingle-digit growth in 2015, with sales probably flat-ish in the first half as we are going against the World Cup and a strong growth in the second half,” he said, adding: “Unfortunately, there still will be negative currency effects, but we are shooting for an improvement in gross profit margin.”
An upgraded store format is also in the works, scheduled to roll out in Hong Kong, Herzogenaurach and Prague this year. “It’s no surprise: when we actually get the windows and the space to present our brand image, it works,” Gulden said.