HERZOGENAURACH, Germany (Reuters) - German sportswear company Puma SE (PUMG.DE) is banking on high-profile signings to underline its sporting credentials and stop sales falling this year, after revenue tumbled more than expected in the last three months of 2013.
Puma ranks a distant third in the sports apparel industry by sales behind Nike Inc (NKE.N) and Adidas AG (ADSGn.DE) and new CEO Bjoern Gulden is trying to return the company to its sporting roots under a turnaround plan that breaks with former chief Jochen Zeitz’s focus on sports-inspired fashion.
Gulden, a Norwegian former professional soccer player who took the helm last July, said the signing of deals with English soccer club Arsenal, Italian footballer Mario Balotelli and the extension of its sponsorship of Jamaican sprinter Usain Bolt showed Puma was a “true sports brand.”
However Puma shares were down 3.4 percent at 201.00 euros by 5.35 a.m. ET, having fallen to a near 2-1/2 year low of 199.2 euros, after the group said it expects flat net sales in 2014, with a rise in the second half to compensate for a first-half fall.
Puma, which last month ousted Nike as kit supplier to Arsenal from next season, is due later this year to launch a brand campaign dubbed “Forever Faster”.
Gulden said another deal with a big soccer club could come although there was nothing imminent. English premiership champions Manchester United Plc (MANU.N) are talking to several firms about a new kit supply deal to replace one with Nike that expires next year.
Puma, 84 percent owned by French luxury group Kering SA (PRTP.PA), said sales fell 13.2 percent to 698.3 million euros ($960 million) in the last quarter, missing an average forecast of 718 million as footwear sales shrank 21 percent.
Kering shares slipped 0.5 percent.
“NOT NO. 1”
Gulden started his presentation of Puma’s annual results by showing the latest medals table from the Winter Olympics - with his home country Norway topping the list.
“Puma numbers were not number one,” he lamented. “Obviously these numbers are not our end game and we are not happy with that ... 2014 marks the start of the turnaround.”
The soccer World Cup and the Winter Olympics in Sochi should help sportswear sales to grow between 3.5 percent and 4 percent this year, the World Federation of the Sporting Goods Industry (WFSGI) predicted last month.
Puma noted that a quarter of all teams at the World Cup would be wearing its kit, including Italy, Switzerland and four teams from Africa, seen as a big future growth market.
Unlike many other brands, which launched their World Cup replica kits before Christmas, Puma shirts go on sale next month.
Gulden said his top priority is to fix the group’s footwear sales, which account for almost half of sales and which fell a currency-adjusted 8.6 percent in 2013, compared with a dip of 1.2 percent for apparel and growth of 9.7 percent for accessories.
He highlighted the social media popularity of an ad for Puma’s new “evoPOWER” soccer boot, with which Balotelli scored a long-distance goal on Friday for Milan to give them a 1-0 win over Bologna. “Sometimes the product actually works,” Gulden said.
As it warned in November, Puma booked 129 million euros of costs in the fourth quarter to close a development centre in Vietnam and bring product staff from London to group headquarters in the small German town of Herzogenaurach.
It expects its gross profit margin to improve slightly in 2014 due to sourcing improvements and a changing product mix. The figure fell to 43.2 percent in the quarter from 44.6 percent due to discounting and currency effects.
Puma said it would pay an unchanged dividend of 0.50 euros per share.
Editing by Victoria Bryan and David Holmes