PARIS — Women are buying into Puma, even as currency fluctuations batter the activewear firm’s bottom line.
“We have a strong history in women’s,” noted Puma chief executive officer Bjørn Gulden, adding sell-through in the category picked up again in the last six months.
“I would say demand was bigger than supply,” Gulden said on a conference call. “The launch of the first Puma by Rihanna shoe, the ‘Creeper,’ has been extremely successful and most retailers have sold out within hours or days. We have generally seen a very positive development in our women’s business and we will put even more focus on the female consumer going forward.”
This would include, but not be limited to, styles bearing Rihanna’s signature, such as the boxing-inspired Eskiva shoe, as well as a complete collection of footwear and apparel slated for 2016, the company said.
Puma SE reported third-quarter net earnings were down 30.9 percent to 20 million euros, or $22.5 million, while sales in the three months ending Sept. 30 advanced 8.4 percent to 914.4 million euros, or $1 billion, which was in line with expectations, according to the sporting goods maker.
Dollar figures are converted from the euro at an average exchange rate for the period to which they refer.
Sales rose most notably in the Americas, up 10.8 percent, with the U.S. boasting a double-digit increase. The Asia-Pacific region was up 5 percent, while EMEA (Europe, Middle East and Africa) slipped 3.6 percent against high comparables.
Footwear grew 3.5 percent, supported by the group’s running and training units, with the Ignite series as the main driver.
Puma’s chief executive officer noted that continued volatile currency trends in some markets and the weakness of the euro, especially towards the U.S. dollar, continue to put pressure on the group’s gross profit margin, operating expenses and net earnings.
“We have taken and will continue to take countermeasures but, as already indicated in the last two quarters, we cannot fully offset these negative impacts on our earnings. Good feedback from retailers, better sell-out and a solid order book validate our outlook for the fourth quarter and allow us to confirm our full-year guidance,” he said.
The company expects an increase in the medium single-digit range for currency-adjusted sales in 2015 and is forecasting further improvement for 2016. “We have no time set for when the transition will be over. We started two years ago with a three-year plan. We are on track but we will need another year,” Gulden said.
The executive noted that the biggest challenge was to get into stores and improve distribution. When “we get the space,” the products are performing very well, he observed.
Gulden said he was also talking to retail partners about where price increases could be applicable to offset negative currency effects, most notably in Brazil, Russia, Turkey and Mexico.
“It’s about finding the right balance. In Russia, we have been increasing prices from quarter to quarter and surprise, surprise: like-for-like sales are up. The volumes are down, but the consumer has accepted the price point,” he said.
For the nine-month period, Puma reported net earnings declined 39.6 percent to 41.5 million euros, or $46.3 million, while sales advanced 12.9 percent to 2.5 billion euros, or $2.8 billion.
With regards to recurring rumors that Kering might be shopping Puma around, Gulden said: “I have no indication from [Kering] that they are in the process of wanting to sell — no indication other than from you guys [the media]. If you look into your archives, you will see these rumors [resurface] every quarter.” He pointed to a Bloomberg report which indicated that a sale would be negotiated as early as next year.
Kering has recently shown itself upbeat about Puma’s progress. “The turnaround is a reality,” Kering’s chief financial officer Jean-Marc Duplaix said last month of its beleaguered German asset when presenting the luxury group’s third-quarter results. Kering holds an 86 percent stake in the company.