Rihanna’s Fashions

Puma reports surge in sneaker sales

The Jamaican women's bobsleigh team with Puma CEO Björn Gulden
Puma’s results are racing ahead. Source: Ralf Rödel/Puma/DPA.

Thanks to marketing support from fashion icons like Rihanna and Selena Gomez, German sportswear brand Puma reported a 16-percent surge in sales on Monday, powering the company past €4 billion ($4.9 billion) in annual revenue for the first time in its history.

“2017 was a very good year for Puma,” gloated Bjørn Gulden, 51, the former Norwegian soccer star who has been CEO of Puma since 2013.

Speaking to reporters in the company’s hometown of Herzogenaurach in Bavaria, Mr. Gulden said the company earned €136 million in 2017, more than double the level of net profit from the year before. He predicted the company will continue to grow strongly in 2018.

Puma expects sales to increase 10 percent this year.

Puma, which like hometown rival Adidas once belonged to the Dassler family, is regaining its independence this year when the company’s current majority owner, the French luxury firm Kering, distributes most of its shares in Puma as dividends to its shareholders.

After the distribution, Puma’s shares will have a free float of 55 percent, according to Franziska Eckersberger, an analyst at Deutsche Bank. A large free float – the number of shares traded minus restricted shares – is appealing to institutional investors because it usually means a stock is less volatile.

That stock market independence, combined with Puma’s recent marketing prowess, has led Wall Street banker Goldman Sachs to predict that Puma’s share price could rise by 25 percent in the coming year.

Mr. Gulden said he expected sales to increase 10 percent in 2018 and forecast earnings before interest and taxes or EBIT of between €305 million and €325 million, compared with EBIT of €245 million in 2017.

Mr. Gulden and his management team have proved adept at navigating the “sneaker wars” that pits Puma against Adidas, which also owns the Reebok brand and Nike. In contrast to Puma’s glowing results, on December 21 Nike reported a 9 percent decline in second quarter fiscal 2018 income at $767 million.

Puma’s growth was strongest in Europe, where sales rose 19.5 percent, thanks in part to sponsorship of German soccer team BVB Borussia and British soccer club Arsenal, which both won championships. It is adding Milan’s soccer club AC Milan to its roster of teams.

In the US, sales grew 14.3 percent, helped by Puma’s women’s fashion director Robin Rihanna Fenty, the music star and movie actress Selena Gomez and model Cara Delevingne.

Overall sales hit €4.1 billion, the highest level in the company’s 70-year history.

After Kering relinquishes control of the stock of Puma, the billionaire French Pinault family will continue to own 29 percent of the shares.

Nering’s shareholders are getting a huge reward for their patience with Puma, with the company increasing its dividend payment from 75 cents a share to staggering €12.50.

“It’s only fair to give something back when times get better,” Mr. Gulden said.

Joachim Hofer covers the high-tech industry and the IT sector as well as the outdoor- and recreational-industry for Handelsblatt. This article was adapted into English by Charles Wallace, an editor for Handelsblatt Global in New York. To contact the author: hofer@handelsblatt.com

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