Puma Net Almost Doubles in Q3
Bjørn Gulden, chief executive officer of Puma SE, confirmed the brand ambassador, who this summer announced his Olympics retirement, has begun training for the 2017 IAAF World Championships, due to be held in London next summer.
“I was with him the day before yesterday, and he confirmed he has started training,” said the executive during a call with journalists on Thursday, following the release of the company’s third-quarter results. “He will run many events next year and then top it with London, so we expect to see him in great shape in 2017.”
The news bodes well for the Herzogenaurach, Germany-based athletic company, whose sustained sales acceleration in footwear – its star category – got a boost in the period from Bolt’s “triple triple” performance at the summer Olympics in Rio de Janeiro, Brazil.
Another catalyst was the as-yet untarnishable golden touch of Rihanna, who signed on as Puma’s brand ambassador and women’s creative director in December 2014. The star’s footwear drops throughout the year, including the high-top trainer, creeperand slide styles, sometime sold out in less than a day, and the debut Fenty Puma by Rihanna clothing collection in September further fanned the hype.
Gulden highlighted the influence of Rihanna and other female Puma ambassadors, including Kylie Jenner and Cara Delevingne, on increasingly solid full-price sell-throughs of women’s lifestyle footwear lines, some with “astronomical sell-through numbers.” He noted their effect is also spilling over to the performance categories
“We are happy with the development in both the performance and lifestyle sides but of course see that the brand heat is currently being generated on the lifestyle or sports-lifestyle sides,” he said. “The consumer who is influenced by Kylie or Cara or Rihanna also does sport and, if she finds Puma to be a good brand, she’s also buying into the performance lines. There’s no conflict there. It’s actually a very good development for us.” Gulden added that “all categories are up except for motorsport and golf, which is kind of flattish.”
Puma SE, which is controlled by French group Kering, said total sales in the third quarter rose 8.3 percent to 990.2 million euros, or $1.11 billion, with growth in the EMEA and Americas regions the main drivers.
“We’re coming from a low base and are very, very happy with the development in the U.S. over the past eight to 10 weeks,” said Gulden, adding that he doesn’t expect any short-term impact on sales from issues like the strong U.S. dollar and volatilities on the currency markets following the unexpected outcome of the country’s elections earlier this week.
“We have hedged almost into the beginning of 2018 and will continue to hedge about 12 months ahead going forward. We’re not going to change that because of whatever political event happened two days ago,” said Gulden.
On currency-adjusted terms, Puma sales gained 10.7 percent in the three months ended Sept. 30. Company net earnings spiked 98 percent to 39.5 million euros, or $44.1 million, almost double that of the equivalent year-ago period.
Puma’s operating profit rose 46.7 percent to 60.3 million euros, or $67.3 million. Despite the strong U.S. dollar, the gross margin — a key indicator of profitability — was maintained at 45.8 percent.
In the nine months to Sept. 30, Puma sales increased 6.4 percent to 2.67 billion euros, or $2.98 billion, while net profits increased 61.5 percent to 67 million euros, or $74.8 million. Dollar figures 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 within the upper half of the range of 115 million euros to 125 million euros, or $125.7 million to $136.6 million at current exchange.