Puma sales The Big Cat Roars Again

Sporting goods maker Puma, long the poorer cousin of German rival Adidas, has turned itself around in recent years, partly thanks to a canny sponsorship deal with top German soccer side Borussia Dortmund.
Puma owes a lot to Borussia Dortmund and players such as Ousmane Dembele.

When sporting goods company Puma and top German soccer team Borussia Dortmund wanted to announce their new partnership, they dreamt up a neat marketing ploy. Overnight, 120 staff from both firms wrapped 3,000 yellow banners – the club’s colour – around trees and street lamps in the northern German city, giving commuters quite a surprise the next day.

Five years later, both Borussia, known by its German acronym BVB, and Puma continue to benefit from the tie-up.

“Dortmund has exceeded our expectations; business with the BVB is increasing every year,” said Matthias Bäumer, head of Puma’s German operations.

The soccer club is equally satisfied. If it had signed a sponsorship deal with competitors like Adidas or Nike, they would have been one club among many, according to head of marketing Carsten Cramer: “With Puma on the other hand, we’re a figurehead,” he said.

Puma's involvement with the Dortmund club has restored credibility to the brand among sports fans.

But even more important for Puma than direct revenues from merchandise is something else: Its involvement with the Dortmund club has restored credibility to the brand among sports fans. Step by step, Puma, long the poorer cousin to German rival Adidas, is acquiring shelf space at retail stores. Mr. Bäumer says that autumn and winter orders from store owners are 60 percent above the previous year.

And last year, according to the manager, sales rose by almost 20 percent in the German-language region.

This is remarkable because overall the market is stagnant. Puma, a publicly listed company, doesn’t publish detailed figures about its business in individual countries. But this much is known: Europe accounts for 38 percent of the company’s revenues of €3.6 billion ($3.9 billion).

Before its deal with Dortmund, Puma had for years focused on fashion rather than sporting lifestyle goods. But when its young target group lost interest at the beginning of the decade, sales collapsed. Since then, Chief Executive Björn Gulden, a former professional soccer player, has been seeking a firm foundation in sports.

Puma continues to lag far behind market leaders Nike and Adidas. The label is ranked only ninth among the significant suppliers to Intersport, Germany’s leading sporting-goods chain. Even mid-sized companies such as Lowa or Schöffel have higher revenues at the sports-store chain.

But Puma’s strategic repositioning is bearing fruit. Last year, it increased sales by 7.1 percent. And at this year’s shareholders’ meeting earlier this month, Mr. Gulden even raised the forecast for this year. Sales are now expected to increase by single digits but double digits. Puma is reckoning with an adjusted profit of €185 to €200 million instead of €170 to 190 million.

Mr. Bäumer recently offered proof of Puma’s serious sporting intentions by signing a deal with BVB rival Borussia Mönchengladbach. “Gladbach is a perfect fit for us: a club with a splendid tradition and excellent youth-development work,” he said.

The youth market is important to Mr. Bäumer, as most young people currently opt to buy their soccer boots from Adidas or Nike. The two giants dominate this market, but Puma is looking to make further inroads both inside and outside Germany. At the beginning of April, for example, it signed a contract with the top French soccer club Olympique Marseille.

And Mr. Bäumer isn’t stopping at soccer. He is also seeking more involvement in handball, a popular European game that is a sort of indoor version of soccer played with the hands. Puma wants soon to equip a major team, and has hired Stefan Kretzschmar, a well-known former player in Germany, to help out. It’s hoped a completely revamped handball collection will reignite player interest in the brand.

But sponsoring BVB continues to be Puma’s main sporting focus. Experts value the collaboration positively. Puma and Dortmund are a good fit in term of their images, according to Philipp Prechtl from the consulting firm Dr. Wieselhuber & Partners in Munich. Both are fighters confronted with a powerful opponent: Puma against Adidas and Nike; Dortmund against German champions FC Bayern Munich.

The attack strategy seems to be working. Puma now sells up to 400,000 BVB jerseys per season. “At the beginning, we didn’t believe that to be possible,” said Mr. Cramer. In comparison, previous Jersey sponsor Kappa only managed to shift 230,000 jerseys per season, despite the team being more successful then than now.

The partners see the biggest potential lying abroad. Dortmund is currently seeking new fans in the Far East, and Puma hopes that consumers far from the home country will notice the return of the brand to the soccer field. “We want for Puma to be represented on every soccer field,” said Mr. Bäumer.

 

Joachim Hofer covers the sports, leisure and IT sectors for Handelsblatt. To contact the author: [email protected]