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Puma Opts for New Management, Image Campaign to Compete with Nike, Adidas

Puma enjoys new-found popularity during the World Cup. Source: DPA.
Puma enjoyed new-found popularity during the 2014 World Cup.
  • Why it matters

    Why it matters

    Puma’s new chief executive Bjørn Gulden is resetting the direction with a new partnership with Arsenal, a new clothing collection and a new IT manager but will these outward signs be enough to shift the downward numbers and seize market share from rivals on a tough market_

  • Facts

    Facts

    • Puma will launch a new image campaign in early August, hoping it will boost sales, which were low for the first half of the year.
    • Andy Köhler, the IT and procurement manager, resigned after one year and will be replaced by Lars Soerensen.
    • Puma is number three on the global sportswear market behind Nike and Adidas.
  • Audio

    Audio

  • Pdf

 

A spectacular show of light and color on London’s river Thames, projected around the world, presented Puma’s new jersey for Arsenal, Britain’s popular premier league soccer team.

Puma designed the jerseys for the club, tearing the contract away from Nike by offering an annual €40 million ($53 million), or four times the amount paid by the U.S. sportswear giant.

The team’s kit now has a brand new look, with diagonal stripes searing across the collar bone – along with the big cat on the arm.

The kit and the deal reflect a change of direction for Puma. But after a year on the job, the new chief executive Bjørn Gulden still has his work cut out for him as the latest figures show.

Puma ranks at number 3 in the global sports business. Source: DPA.
Puma ranks at number 3 in the global sports business. Source: DPA.
Puma ranks at number 3 in the global sports business. Source: DPA.

 

Sales were down six percent in the second quarter compared to the same time last year, profit shrunk from €18 million to €4 million and worst of all, shoe sales have fallen nine percent to €278 million.

For the first half of the year, Puma’s sales fell by 6.5 percent to €1.4 billion. That left the sportswear maker with earnings of €40 million rather than €68 million.

The repositioning of the brand needs time to pay off and it will also take time to turn the business around, Mr. Gulden told investors. “Be patient.”

 

 

Source: Bloomberg, Puma
Source: Bloomberg, Puma
Source: Bloomberg, Puma

 

Here is a test description of the video.

The collections that bear his signature will not go on sale until spring next year.

Mr. Gulden has further plans to pep up Puma. He is launching a new ad campaign in early August which he hopes will reverse the downward trend.

The new CEO deliberately waited until after the World Cup before launching what will be Puma’s biggest image campaign of recent years. He could not compete with the budgets of industry giants Adidas and Nike.

And for the workforce, he is sticking to the call he made when he took on the job: more sweat, less glamour. He wants the brand associated with the soccer pitch and not with a fashion show catwalk.

Mr. Gulden has not had an easy run so far. Andy Köhler, responsible for IT and procurement and among Puma’s top managers, signed on at the same time as the chief executive. But he has decided to step down for personal reasons at the end of the month. Lars Soerensen, who had previously reported to Mr. Köhler, will take up the empty spot.

Despite these difficulties, Puma’s share rose by one percent to €202 on Tuesday. Analysts from Kepler Chevreux, a European financial services firm, said the quarterly figures were better than expected. They predicted that the share price could increase to €220 in the coming months.

It won’t be an easy fight. Puma is up against big competitors like Adidas and Nike and smaller firms like Asics, a Japanese sportswear maker.

“Of all the biggest brands, Nike benefitted most in the first half year,” said Klaus Jost, chief executive at Intersport, a chain store selling sportswear. Nike’s sports shoe ‘Free’ is now a global bestseller and was one of the most sold sportswear items in Germany in the first half of 2014.

Mr. Gulden is not worried. “I feel we are making progress on all our key strategic priorities,” he said.

While the soccer players sweat it out on the pitch, managers at the German sportswear maker are sweating too, as they play for the long haul on a tough field.

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