Photographer: Guenter Schiffmann/Bloomberg

Puma Earnings Sprint Past Estimates on Running-Shoe Demand

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Puma SE, the German athletic-gear maker that sponsors sprinter Usain Bolt and English soccer club Arsenal, reported sales and profit that topped analysts’ estimates as consumers bought its Ignite running shoes and Evo soccer cleats.

Earnings before interest and taxes were 6.8 million euros ($7.5 million) in the second quarter, Puma said Friday, beating the 4.3 million-euro estimate of analysts surveyed by Bloomberg. Sales rose 18.5 percent to 773 million euros, also topping predictions. The shares rose as much as 5.9 percent in Frankfurt, the steepest intraday gain in eight months.

Chief Executive Officer Bjoern Gulden is trying to revive the faded sportswear brand with new products, splashy athletic sponsorships and edgy ads, yet the turnaround has been slow going. Puma sliced its profit outlook on May 6, citing higher dollar-denominated costs of buying shoes and jerseys. That’s forcing Puma to raise prices in countries including Russia and Mexico.

“In markets where Puma is stronger, like Italy and Japan, it may be easier to raise prices,” said Peter Steiner, an analyst at Bankhaus Lampe who has a sell recommendation on the shares. “In others like Germany and the U.S., it’s probably harder.”

Puma rose 5.7 percent to 162.65 euros at 11:52 a.m. in Frankfurt, trimming its loss this year to 6 percent.

No Slowdown

The Norwegian CEO, a former soccer pro in Germany, said the adverse currency effects won’t slow down efforts to improve Puma’s marketing, store layouts and technology.

Puma is moving some manufacturing to Argentina and Mexico to offset currency losses, and the company has started knitting the upper part of a new Ignite running shoe at a car-seat factory in Germany, Gulden told reporters on a conference call.

“In markets where Puma is stronger, like Italy and Japan, it may be easier to raise prices,” said Peter Steiner, an analyst at Bankhaus Lampe
“In markets where Puma is stronger, like Italy and Japan, it may be easier to raise prices,” said Peter Steiner, an analyst at Bankhaus Lampe
Guenter Schiffmann/Bloomberg

“Many people will try to move production closer to the markets,” he said. At the same time, “if you’re coming from a weak positioning, then raising prices is very difficult.”

Puma’s operating margin has narrowed by more than 10 percentage points in the past decade and is set to contract further this year, Citigroup analyst Thomas Chauvet has said. A sale by Kering SA of its 86 percent Puma stake is an “increasingly credible scenario” in the next 12 to 18 months, he said.

Desirable Supplier

Gulden has sought to reposition Puma, based in the Bavarian town of Herzogenaurach, from a maker of sport-lifestyle wear that often discounted its products into a more desirable supplier of sneakers and gear for soccer, running and other sports. He’s adopted an irreverent advertising approach featuring sprinter Bolt, soccer star Mario Balotelli and the singer Rihanna.

In late June, Puma sold Tretorn, a Swedish maker of rainboots and other footwear, to Authentic Brands Group, the owner of Juicy Couture and Frederick’s of Hollywood.

Currency-adjusted sales rose in all regions, including a 12 percent gain in North and Latin America; a 3.9 percent rise in Europe, the Middle East and Africa; and a 6.2 percent increase in the Asia-Pacific region.

(An earlier version of this story corrected the name of a running shoe.)

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