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Puma On Track to Deliver Expected 2015 Results

Global athletic footwear and apparel maker Puma released third quarter 2015 financial results today that were in line with expectations.

Sales grew by 8.4% to €914.4 million, an increase of 3.1% in constant currency. Footwear sales increased by 3.5% in constant currency to €408.4 million, helped by success of running and training shoes in the Ignite and Descendant product platforms. Apparel segment sales grew by 2.5% in constant currency to €346.9 million, and accessories sales increased 3.7% currency adjusted to €159.1 million.

Growth in the Americas continued, with North and Latin America both showing strong performances, with sales up 10.8% currency adjusted to €325.1 million, helped by double-digit gains in the U.S. market.

Sales in the EMEA (Europe, Middle East, and Africa) region declined 3.6% currency adjusted to €375.7 million. The prior year period included sales of Tretorn, whose trademark rights were sold in the second quarter of 2015. In the Asia/Pacific region, sales were up five percent in constant currency to €213.6 million. While China and India showed substantial growth within the region, sales in Korea declined.

Puma by Rihanna

The company is in the process of revamping its women’s products and marketing, and increasing its focus from lifestyle and fashion to training and running. It is doing this by featuring songstress Rihanna in its Forever Faster brand campaign, a multi-million-euro multimedia campaign with a focus on training. In September, the company launched the first in a series of Rihanna-inspired products, including the “Creeper.” The shoe is a remix of the iconic Puma Suede with a creeper sole inspired by the New York City punk rock scene with high-end details and Rihanna’s signature branding. The shoe generated unprecedented social media and PR coverage for Puma and sold out within hours. More colorways are currently being sold via and key retail partners worldwide.

CEO Bjørn Gulden said in a statement: “Puma’s sales in the third quarter developed as expected with growth in all product categories. I am happy to see that our footwear category has increased for the fifth quarter in a row. I am especially pleased to see that also the sell-out at retail to the end consumer is continuously improving in all categories. The launch of the first Puma By Rihanna shoe, the “Creeper”, has been extremely successful and most retailers have sold out within hours or days. We have generally seen a very positive development in our Women’s business and we will put even more focus on the female consumer going forward.”

Gross margin declined by 50 basis points to 45.8%, due to negative currency effects. The footwear gross profit margin decreased from 41.9% to 41.2%, the apparel margin rose from 49.6% to 49.8% and the margin for accessories fell from 50.3% to 49.1%.

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Net earnings fell by 30.9% on a reported basis to €20 million, or €1.34 per share, compared to €28.9 million, or €1.93 per share, in the prior year period.

The company expects an increase in the medium single-digit range for full-year currency-adjusted net sales, and reiterates its expectation for a full-year earnings.

About the prevailing macro environment and its impact on Puma, Gulden added: “The continued volatile currency trends in some markets and the weakness of the euro, especially towards the US dollar, continues to put pressure on gross profit margin, operating expenses, and net earnings. We have taken and will continue to take countermeasures but, as already indicated in the last two quarters, we cannot fully offset these negative impacts on our earnings. Good feedback from retailers, better sell-out and a solid order book validate our outlook for the fourth quarter and allow us to confirm our full-year guidance.”