Puma raises sales outlook for 2014 as sneaker sales rebound
By Bloomberg
Puma SE boosted its sales outlook for this year as the sneaker and sportswear maker starts to feel the benefits of the “Forever Faster” ad campaign with Usain Bolt and sponsorships of soccer teams such as Arsenal.
Revenue will rise by a low-single-digit percentage this year after adjusting for currency effects, up from a prior forecast of unchanged sales, the Herzogenaurach, Germany-based company said today. Third-quarter sales topped analysts’ estimates, though profit missed on higher marketing spending.
“Things are moving in the right direction, but as we have said all along, we know that the repositioning of Puma and the turnaround of the business will take time, as we need to continue to build confidence in the marketplace,” Chief Executive Officer Bjoern Gulden said in a statement.
The CEO, appointed last year, is revamping Puma’s athletic shoes, stepping up marketing and reorienting the company’s positioning around the “Forever Faster” theme, invoking athletes including Bolt and soccer player Mario Balotelli. Footwear sales rose for the first time in seven quarters.
Puma is readying new products for next spring, looking to restore some of the luster of its heyday in the 1970s when it shod New York Knicks basketball star Walt Frazier and the Jets quarterback Joe Namath.
‘Paying Dividends’
The shares rose 1 percent to 176.85 euros at 9:58 a.m. in Frankfurt. They have fallen 25 percent this year.
“Puma’s repositioning appears to be paying dividends,” Mario Ortelli, an analyst at Sanford C. Bernstein, said in an Oct. 28 note. He has the equivalent of a hold recommendation on the shares.
Earnings before interest and taxes fell to 46 million euros ($57 million), compared with the average 57.8 million-euro estimate of analysts surveyed by Bloomberg. The gross profit margin narrowed to 46.3 percent from 47.1 percent a year ago.
Pumas’s ad budget and sponsorship deals are cutting into profitability. The company has started selling soccer gear branded with the Arsenal club logo and colors as part of a sponsorship deal with the English Premier League team. Jerseys with Bundesliga team Borussia Dortmund’s logo boosted its German business, Puma said.
Revenue rose 6.4 percent to 843 million euros, adjusted for currency translations, Puma said. Sales in the Americas rose 6.3 percent, European revenue increased 4.4 percent, with notable strength in Germany, and Asian sales climbed 11 percent.
Sports gear competitor Adidas AG yesterday reported profit that topped analysts’ estimates, though the company is beset by poor performance in America. The No. 1 sports-gear company Nike Inc.’s net income in rose 23 percent in the most recent quarter.