PARIS — Puma SE saw net profits surge in the second quarter, suggesting the German sportswear firm controlled by Kering is on track for a year of strong growth.
Despite the positive results, Puma chief executive officer Bjørn Gulden, who has been steering its turnaround since 2013, said he still sees “room for development” at the Herzogenaurach, Germany-based firm.
“I’m not celebrating this as a huge success. We know that we still have a lot to prove, but it’s another step in the right direction,” he said during a conference call with journalists Wednesday. “In the beginning you have to overinvest in your spend, both in your [operational expenditure] and your marketing, to create brand heat, and now we can see that the leverage is kicking in.”
Net earnings catapulted to 21.9 million euros in the three months ended June 30 from 1.6 million euros during the same period last year. Sales were up 16 percent to 968.7 million euros, adjusted for currencies.
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Puma saw double-digit growth in all regions, with footwear the main driver behind sales. “Major gains” were achieved by strong sell-throughs on the running and training and sport style categories, and an ever-solid women’s business, with the Platform, Suede, Basket Heart and Ignite Limitless styles performing well.
Introductions in the quarter included Puma’s new lacing technology Netfit across performance and sport style footwear.
Operating profit nearly quadrupled to 43.4 million euros year-over-year while gross margin — a key indicator of profitability — rose 90 basis points to 46.5 percent.
Gulden said the company will maintain its marketing budget of around 10 to 12 percent of total spend.
“We are continuing to invest in sports; we have announced new assets on the soccer side and you will see more athletes being signed. In addition, we are making investments in what I call the entertainment scene, with people like Rihanna or Kylie [Jenner] or Cara [Delevingne]. It’s a combination of athletes, teams and celebrities or opinion leaders who are culturally relevant,” he said.
Recent signings include Big Sean, with an exclusive collection designed in collaboration with the Grammy-nominated, multiplatinum recording artist set to be released in the spring. He will also be the face of the next Puma Classics campaign due for release this summer.
The IAAF World Championships, which will kick off in London at the end of next week, will likely mark the end of the active career of Puma’s top ambassador, Usain Bolt. The athlete will continue to represent the brand after hanging up his shoes, the company said.
Gulden declined to comment on competitor Nike’s plans to sell a limited product assortment on Amazon.com’s platform, noting that Puma had already been selling directly to the platform since before his arrival at the company.
“We all know that with online sales, be it a branded platform like our own or a third-party platform, is growing quicker than bricks-and-mortar, and I think that will continue for a while, but that also good bricks-and-mortar retailers are doing good business online. We need to adjust to where the consumer is buying and then make sure there is enough margin so that anybody playing in this chain is making money,” he said.
“We have been clear we don’t want to be vertical, our retail represents around 21 or 22 percent [of sales] and our goal is to get more space with retailers that have good traction with consumers,” Gulden added.
In terms of outlook, the sportswear company last week announced it had raised its full-year guidance on the wings of the strong second-quarter performance.
As reported, sales are expected to grow between 12 and 14 percent, adjusted for currencies, up from a previous target of low double-digit growth.
Strong sell-throughs driven by footwear helped Puma get off to a better-than-expected start to the year. In the first quarter, it surpassed the 1-billion-euro quarterly sales milestone for the first time in the company’s history. Revenues rose 18 percent, driven by all regions, which posted double-digit gains.