Pouncing Puma gains on much bigger rivals

It may be smaller but Puma's size grants it access and flexibility that its bigger rivals can only dream of.
Quelle: dpa
Björn Gulden.

Puma is on the prowl, taking advantage of its smaller size to react more quickly and nimbly to market trends than Nike and Adidas, its larger, staunch rivals.

It has paid off this year as the Bavarian firm hit the sweet spot of its youthful clientele, catering to trends such as thick soles with its “Bulky-Shoes.” For next year, it is looking for shoes to slim down again and is going back to the low-profile racing shoes that were a hit at the turn of the century.

Puma is also expecting splashy colors to have big appeal, so it has “bridal rose” training jackets, “vineyard wine” tights, and “milky blue” fitness tops ready to go.

Humble brag

This nimbleness pushed Puma to a 12 percent gain in sales in the first nine months of the year, with profit soaring by nearly a third. These were better gains than those posted by Nike or Adidas, but as a distant third in the global sportswear sweepstakes, Puma is nowhere near to closing the gap. But that doesn’t mean the company, whose logo includes a silhouette of the namesake predator, poses no threat.

“We’re still not as good as Adidas or Nike,” CEO Björn Gulden said. The Norwegian-born ex-soccer player has headed Puma only since 2013, but he is completely on board with the rivalry his firm has had with Adidas since the two founding brothers Rudolf and Adolf Dassler had a falling out and split their sports shoe company into two in 1948.

How big is the size discrepancy? Puma’s third-quarter total sales were €1.2 billion while Nike added €800 million in the quarter. Size counts in sportswear because marketing runs at about 12 percent of sales. Puma had €140 million to spend in the third quarter while Nike, with total sales of €8.8 billion in the period, had more than €1 billion at its disposal.

Arrogant execs

But Puma puts its smaller size to good use. Not only is it more agile in responding to trends, it cultivates closer relationships with retailers. Top managers at Puma are much more accessible, meaning store operators can get their problems solved much more quickly.

Top executives at Nike and Adidas have the reputation of being inaccessible, even arrogant. Markus Trute, head of Keller Sports in Munich, considered to be one of the most innovative sports retailers in the country, praised Puma’s flexibility as a big advantage. And CEO Gulden parses out his marketing budget carefully.

Winning strategy

When he came on board five years ago, Puma had only two soccer clubs signed up, but both, Arsenal in the UK and Dortmund in Germany, were well known. This year Puma added Marseille, AC Milan and Germany’s Mönchengladbach to its roster, reinforcing its credibility with soccer fans.

He signed up global singing star Rihanna as creative director for his women’s line, and recently recruited Brazilian supermodel Adriana Lima.

Puma has also targeted segments neglected by its bigger rivals. It is aiming sales at the numerous amateur clubs in Germany, where it sees big opportunities for growth. The company’s ambition is to double is market share in soccer from just under 10 percent now by 2022. Puma also has carved out team handball, a popular sport in Europe, as a target market and signed up Stefan Kretzschmar, the best-known former player for the national team, as spokesman.

This year’s growth has rewarded those efforts, but the company has progressed rapidly since Gulden took over. It has gone from €3 billion in sales and a meager profit of €5 million in 2013, to €3.2 billion sales in the first nine months alone, and a profit of €176 million.

Investors have noticed. The share price has gained about a quarter since the beginning of the year, rising to €440. The MDAX, the index of 60 German stocks just below the 30 blue chips in the DAX, has lost 10 percent in the same period.

Joachim Hofer covers sport and leisure industries for Handelsblatt. Darrell Delamaide adapted this story into English for Handelsblatt Today. To contact the author: hofer@handelsblatt.com.

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