NEW YORK — A year after the acquisition of Puma by French luxury conglomerate PPR, Puma North America President and GM Jay Piccola said he’s optimistic about where the brand is headed — despite a tough retail market.
Speaking to Footwear News from Puma’s Westford, Mass., head office, Piccola said, “Given the economic challenges and the retail challenges that exist today, it’s nice to have a brand that is still extremely desirable and extremely elastic.” He added, “I think if any brand is recession proof, it’s Puma.”
The brand has been hit hard by the softness at mall-based retailers in North America. In reporting its first-quarter earnings in May, Puma attributed a 14 percent drop in domestic sales — and a 21 percent drop in future orders — to the “moderate” environment in mall-based businesses. “I don’t think it’s any secret to anyone in the industry that mall traffic is down, and the mall consumer is finding other places to shop,” Piccola told FN. But the exec said he sees signs of a turnaround — possibly as soon as the first or second quarter of next year — and said he had “a great deal of faith” in the mall retailers.
“The retailers there are professionals, and they’re not going to sit still and watch comps continue to deteriorate,” he said. “We’ve gone through the period where the way to win customers is by price, [where] everyone loses at the end of the day. And [brands and retailers are] starting to recognize that now.”
A bright spot, Piccola said, has been Puma’s partnership with PPR. “There’s always trepidation when someone comes in, but it’s really been a hands-off relationship,” he said. “They offer us their expertise where we think they can help us, and I know they’re working in Europe on some global aspects of the business. But in terms of Puma North America, it’s been very little direct involvement.”
But that’s not to say Puma isn’t planning to capitalize on the new arrangement. “I would be the first one to tell you that we haven’t taken advantage of Alexander McQueen the way we should and could,” he said, adding that under PPR, Puma would put more emphasis on its designer collaborations, which include McQueen and Yasuhiro Mihara. Piccola said that high-end and collaboration product would be key in maintaining the brand’s position with trend-making retail accounts. “It’s very important that we’re credible and we’re a reliable vendor in the fashion arena,” he said. “[In the past], we’ve had some wonderful seasons, but we haven’t been as consistent as we should be. I think you’ll see more focus and more consistency from us in the future.”
Another aspect where PPR’s help might pay off could be retail, he added. “[The people at PPR are] very, very good retailers, and there could be synergies there,” he said. And post-merger, the brand has been adding to its own retail portfolio. In May, it bowed a store in Glendale, Calif., and two more locations — in Scottsdale, Ariz., and Corte Madera, Calif. — are slated to open at the end of next week.
The company will also continue to expand in sports performance, Piccola said, naming the nascent golf and sailing businesses, as well as soccer, as segments that promised the most growth. The exec was also bullish on running, a market he called “our fastest-growing category.”
“For the first time in my 11 years at Puma, we finally have traction in performance running,” Piccola said, adding that the brand started seeing “really strong numbers” in the first quarter of 2008. “It’s taken a great deal of patience and a number of tries, but we have finally proven [ourselves], and we’re doing absolutely great right now at the specialty shop level.” The brand is carried at running specialists including Fleet Feet Chicago and Run Tex in Texas. In addition, for spring ’08, all Puma stores began featuring the brand’s performance category footwear and apparel.
Success at running specialty has also led to broader success with running-inspired lifestyle looks. “It’s important for our brand strategy to have credibility as an authentic performance shoe,” Piccola said. “[But] where we get the dramatic growth is in sport lifestyle running, which is more for casual wear but is [still] a running silhouette.” The running category as a whole will get a boost this week, with the July 12 launch of a national campaign for the Cell Meio light running style, which will include print, TV, online and outdoor components, as well as in-store programs with Foot Locker, Finish Line, Nordstrom, Journey’s and Eastbay.
Matt Powell, an analyst with SportsOneSource, said the efforts Puma has been making to segment its business and focus on product have been paying off. “As we saw reflected in its numbers in [the first quarter], the business in the U.S. is still pretty challenged,” Powell said, adding that the mall-based business was the real culprit. “But in the rest of the athletic specialty market and in the more moderate channel, the brand has some pretty good traction. They’ve gone back to the design side and worked very hard on making the correct product for the different channels.”
With so many projects in the works, Piccola is looking beyond the current economic woes. “At the end of the day, [the state of the economy] does not change our strategy,” he said. “What’s important is, ‘How are we positioned when the economy improves?’ If you sell your soul now, you’re going to be positioned that way once this thing [gets better]. And we want to be positioned properly when the economy improves.”