Bolt, Rihanna help drive turnaround in Puma’s results

Usain Bolt

German sportswear firm Puma reported strong sales growth in the fourth quarter, particularly in Europe, and gave a confident forecast for 2017 as it looks to turn around its business.

The sportswear giant reported a quarterly net loss of $4.9 million, with sales up 9 percent to $958 million. Sale of footwear rose for the 10th consecutive quarter and grew 15 per cent, better than apparel and accessories.

Puma’s worry is that its EBIT margin at 3.5 per cent is way below industry average, even though its full year EBIT rose 33 per cent to $159.4 million. EBIT is the difference between operating revenues and operating expenses.

The rising trend for retro sneakers and its partnerships with sportstars like Usain Bolt and singer Rihanna has helped turn around the business for CEO Bjorn Gulden. The company said that operating profit in 2017 will grow at least as fast as last year, when three big global sports events and better sales of women’s wear had driven growth.

Brand ambassador Usain Bolt is set to retire. Puma believes that the Jamaican may become more visible and hence valuable for the company. In recent months, it has signed eight athletes that have the potential to become future stars.

Puma’s rival Under Armour had reported its quarterly financials last week and its shares crashed over 20 per cent after that. Its operating income had declined six per cent to $167 million and it had predicted a bleak 2017 outlook. Its quarterly net income, at $104.9 million, was down marginally from the same quarter a year ago.