Soccer and women helped propel a sales acceleration at Puma in the second quarter.
The Herzogenaurach, Germany-based firm, which is controlled by French group Kering, said total sales rose 7 percent to 826.5 million euros, or $933.3 million, in the three months ended June 30, boosted by the Euro 2016 tournament and strong demand for its women’s lines, fronted by Rihanna and Kylie Jenner.
On currency-adjusted terms, the gain stood at 13 percent. This compared with a rise of 3.7 percent in reported terms and 7.3 percent on an organic basis in the first quarter of 2016.
Net earnings totaled 1.6 million euros, or $1.8 million, in the second quarter, compared with a loss of 3.3 million euros, or $3.6 million, during the same period a year earlier. Meanwhile, Puma’s operating profit rose 75.1 percent to 11.9 million euros, or $13.4 million.
The gross margin — a key indicator of profitability — declined in the quarter to 45.6 percent from 46.7 percent in the prior-year period due to the negative impact of the stronger U.S. dollar. The decrease was reflected in all product segments.
All dollar rates are calculated at average exchange rates for the period concerned.
The firm reiterated its 2016 guidance for a high-single-digit increase in net currency-adjusted sales; a gross profit margin in line with last year’s level of 45.5 percent, and an operating result between 115 million euros and 125 million euros, or $126.4 million to $137.4 million at current exchange rates.
Bjørn Gulden, chief executive officer of Puma, said sales were on track with double-digit organic growth. He noted a continued improvement in sell-out as the brand gradually regains popularity after a prolonged slump.
“For us, it is important that what we sell in is selling out, because we need to build trust with the retailers and the consumers,” he said. “Yes, you could probably grow more and yes, there are people growing faster, but we are building stone by stone, therefore, we are happy with the development within the structure that we have.”
The second-quarter performance was driven by strong sales in the EMEA, or Europe, Middle East and Africa, region, up 23.5 percent in currency-adjusted terms. Revenues in the Americas rose 5 percent, while the Asia-Pacific region posted a 10.3 percent increase, mainly driven by China.
Apparel sales jumped 19.5 percent, helped by the success of the team sport category, which was fueled by the Euro championship in which five national teams wore Puma jerseys. This suggested the high-profile incident in which four Swiss national players had their jerseys ripped on the pitch had a limited impact.
Footwear sales were up 7.3 percent in currency-adjusted terms, with sport style, fundamentals and team sport posting major gains. Puma will reissue the best-selling furry slide from Rihanna’s Fenty for Puma collection in a new gray color on Aug. 5, together with a third shipment of previous iterations.
Sales of accessories rose 14.1 percent in the quarter, driven by higher demand for backpacks and headwear, among others.
“The Rihanna product has been tremendously successful,” Gulden said. He pointed to strong demand for the singer’s Creeper and Fenty Trainer shoe styles, but said women were also buying more functional fitness products including tights, sports bras and sports tops.
“We see that most retailers are growing over-proportionally in women’s. We see that in the lifestyle area, but we also see that in the sporting goods area, and that there is more focus on women’s in almost all our customers, and that is across the board,” he explained.
“It’s more difficult on the men’s side because, you know, the product is more similar and it’s probably where we haven’t had the uniqueness for a long time. But in women’s there is a demand for our product almost everywhere and the success of it, relative to where we’ve been, is very big,” Gulden added.
In sporting events, Puma said it had an on-field presence of almost 40 percent across all matches in the Euro 2016, held in France from June 10 to July 10. Antoine Griezmann, the top scorer in the tournament, was among the players wearing Puma’s Tricks boots in neon yellow and pink.
It enjoyed an unexpected win in the English Premier league when Leicester City in May became the first Puma-sponsored team to take the title, while Arsenal FC — also a Puma team — came in second.
Finally, Puma is gearing up for the Rio de Janeiro Olympics where its star athlete, Jamaican sprinter Usain Bolt, is set to compete for what may be the last time. Gulden said Puma expects to continue working with Bolt even if he decides to retire after the competition.
“If he doesn’t run, then we have a Plan B with him and we will continue to work with him, maybe even closer, because he will have more time,” he said. “He will work with us on product development, he will work with us on sports marketing, he will help us with the other athletes and maybe also in a commercial role. You know, the guy knows the Caribbean very well; we have a strong position in the Caribbean and I can see him do a lot for us.”
He said Bolt was also helping Puma identify his successors from among the rising generation of track and field sprinters in the Caribbean. Puma recently added Barbados to the list of athletics teams it sponsors in the region, alongside Jamaica, Cuba, Grenada, Dominican Republic and the Bahamas.
“All of us, unfortunately, have to admit that there won’t be a second Usain, but there will probably be something else,” Gulden predicted.