Slow Expansion A Straggling Puma

The sports brand is growing soundly and making decent earnings again. However, the competition - Adidas and Under Armour specifically - is still moving faster.
Quelle: Bloomberg
Puma CEO Bjørn Gulden promises further growth this year.

Sportswear company Puma pushed up its sales last year by seven percent to a good €3.6 billion or $3.8 billion. At constant exchange rates, revenues have even increased by around ten percent, the company said Thursday.

But that’s not all. Europe’s second-largest sports shoe manufacturer, based in Herzogenaurach, Bavaria, is also earning again decently. Profits shot up by two-thirds to €63 million.

“The results of 2016 show that Puma is gaining momentum,” said Chief Executive Bjørn Gulden. The one most likely to be pleased by that is Kering, the French luxury goods holding company which owns 85.8 percent of Puma. Dividends have also shot up by 50 percent to €0.75 per share.

At the German dealer association, Sport 2000, the word is that Under Armour is developing “extremely positively.”

Last year the brand with the pouncing big cat logo profited from the soccer European Cup, the Olympic Games, and also from prominent advertising ambassadors like the singer Rihanna and the model, Kylie Jenner.

Mr. Gulden came to Puma to turn the stricken brand around just under four years ago. Puma had gotten too caught up in the fashion business and had neglected its core business with athletes. The Norwegian is certainly being successful at putting the shine back on the dull brand.

Admittedly, however, compared to the essentially larger local rival brand Adidas, Puma’s growth continues to be rather restrained. The label with the three stripes won’t be presenting its annual figures until the beginning of March, but Adidas has lately been moving at a considerably more active pace.

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Added to that is the fact that even in its home market of Germany, Puma is continuing to have a difficult time. The brand ranks ninth among vendors at Germany’s leading sporting goods chain, Intersport. This means that the company is even limping behind small and mid-sized companies like Schöffel, a producer of sports apparel, or Lowa another producer of sports shoes. Adidas and the U.S. group Nike are world leaders and are miles ahead in Germany’s sporting goods retail business.

But that isn’t all. The new guy on the block, Under Armour, is rapidly catching up. The brand was hardly known in Germany just four years ago and ranked 93rd on Intersport’s list of suppliers. Now the Americans are ranked 24th. “We expect a considerable increase in the rate of growth for 2017,” said Intersport director of Product Management, Jochen Schnell. At the German dealer association, Sport 2000, the word is that Under Armour is developing “extremely positively.” If it continues as in 2016, the challenger from Baltimore could pass Puma in Germany this year.

But it won’t come to that, if Puma boss Mr. Gulden has his way. The 51-year old is promising an increase in sales for the current year of up to nine percent as well as a considerably larger profit. Mr. Gulden: "We are confident that, going forward, we will be able to maintain the momentum that we have gained as a brand.”

The investors, at any rate, have for some time been casting a glad eye at Puma. Since the beginning of 2016, the share price has climbed by almost half.


Joachim Hofer covers the high-tech industry and the IT sector as well as the outdoor and recreation industry for Handelsblatt. To contact the author: [email protected]