February 14, 2019 / 9:09 AM / a day ago

Puma's caution on 2019 hits shares despite strong quarter

HERZOGENAURACH, Germany (Reuters) - Sportswear group Puma gave a conservative forecast for 2019 on Thursday despite strong fourth-quarter sales helped by demand for its chunky RS-X shoes and Cali sneakers, sending its shares down more than 6 percent.

The logo of German sports goods firm Puma is seen at the entrance of one of its stores in Vienna, Austria, March 18, 2016. REUTERS/Leonhard Foeger

Chief Executive Bjorn Gulden conceded that the new target was cautious, but also said: “When there is upside, we’ll take it. Then we will do more.”

Puma has been growing faster than its bigger German rival Adidas and market leader Nike, helped by savvy social media campaigns and partnerships with celebrities like singers Selena Gomez and Rihanna and rap mogul Jay-Z.

Nike’s latest results showed signs of a rebound as the company speeds up new product launches. The U.S. company has forecast sales growth for 2019 approaching low double digits. Adidas reports quarterly figures on March 13.

Puma’s fourth-quarter sales rose a currency-adjusted 20 percent to 1.226 billion euros ($1.38 billion), beating analyst consensus for 1.17 billion, while operating profit came in at 38 million euros, shy of analyst forecasts for 39 million.

The company expects a slowdown in 2019, forecasting sales growth of about a currency-adjusted 10 percent and operating profit of between 395 million and 415 million euros, below average analyst forecasts for 430 million.

A year ago, Puma had forecast a sales increase of 10 percent but then upgraded its targets over the course of 2018.

Puma’s fourth-quarter sales jumped a currency-adjusted 39 percent in Asia, shrugging off concerns about cooling demand in China. They rose 17 percent in the Americas, helped by Puma’s launch of its first basketball shoe in 20 years in September.

Gulden said he saw no sign of a slowdown in China, noting that shoppers there were increasingly buying international brands.

Puma said it had reacted quickly to the new trend for retro sneakers with thick soles, launching the Thunder and RS styles, while shoes worn by Gomez proved a hit with women.

Writing by Emma Thomasson; editing by Thomas Seythal/Michelle Martin/Jane Merriman

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