Jul 24, 2015
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Puma's sales start seeing boost from marketing spend

Jul 24, 2015

German sportswear company Puma reported better-than-expected sales for the second quarter as investments in new products and marketing started to pay off, helping to lift its shares as much as 3 percent.

Puma launched its biggest ever marketing campaign a year ago to gain back territory lost to Adidas and Nike , prominently featuring Olympic sprint champion Usain Bolt, who has been promoting a new springy-soled running shoe.

Puma is counting on Rihanna's universal appeal to further increase its results - Puma

However, currency headwinds and marketing spending caused a second quarter net loss of 3.3 million euros ($3.6 million). Analysts polled by Reuters had forecast a net profit of 920.000 euros.

The sportswear industry sources most of its products from Asia in U.S. dollar contracts, but Puma makes a bigger portion of profits than its rivals in markets where currencies have tumbled against the greenback like Brazil, Argentina and Russia.

The loss came despite a 7.6 percent rise in currency adjusted quarterly sales to 772.7 million euros, which beat analysts forecasts.

Sales were driven by strong growth in the Americas, where Puma makes a third of its revenue, with a currency adjusted gain of 11.6 percent.

"Investment in new and innovative products is starting to pay off," Chief Executive Bjorn Gulden said in a statement with regard to a 16.2 percent rise in currency adjusted sales in Puma's heavily promoted footwear business.

Puma, which named pop star Rihanna as its women's creative director in December, reiterated a reduced outlook given in May for its gross profit margin to fall by 100 to 150 basis points from 46.6 percent last year.

The group, majority owned by French luxury goods group Kering, still expects operating earnings to fall to between 80 million and 100 million euros from 128 million in 2014.

It sees currency adjusted sales increasing by a medium single-digit percentage from last year's 751 million euros.

Puma shares were 2.5 percent higher at 157.85 euros at 0717 GMT, outperforming a flat German small-cap index.

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