Puma Slims Down to Perk Up

Puma Slims Down to Perk Up
Puma’s Mobium Elite shoe

After posting a loss in the fourth quarter, Puma SE has revealed a plan to trim its organizational structure and improve profitability.

The Herzogenaurach, Germany-based athletic firm said last week that implementation of its transformation and cost-reduction program, which began in the second half of 2012, will continue throughout 2013.

This includes the closure of about 90 unprofitable stores, mostly in established markets, and the elimination of 450 jobs. Total sales are projected to be at a similar level to 2012, and new store openings are also planned, primarily in emerging markets.

Puma also has terminated endorsement contracts that are either unprofitable or no longer part of its core categories going forward, and has exited all European Rugby activities. Beyond 2013, Puma will cease production of sailing products. It will focus instead on its outdoor business, and said sailing has served as the perfect springboard for this transition.

Puma CEO Franz Koch is stepping down from his role at the end of March. He told analysts at a press conference that the firm’s previous goal to reach revenue of 4 billion euros ($5.3 billion at current exchange) by 2015 is no longer a priority. The focus is now on improving profit.

Puma swung into the red in the fourth quarter with a net loss of 42.6 million euros, or $56.8 million, compared with a net income of 33.1 million euros, or $44.2 million, in the same period a year ago.

By product segment, footwear rose 8.6 percent, while apparel climbed 15.2 percent and accessories 12.3 percent.

While Puma said revenue increased in all regions during the quarter, performance in the Asia-Pacific region was the best, advancing 16.2 percent. The Americas grew 12.2 percent, while the EMEA region improved by 7 percent.

Globally, both retail revenue and e-commerce rose about 23 percent.

Puma is looking to 2013 as a chance to re-energize its product pipeline, the firm said. It is introducing a cross-category brand platform called The Nature of Performance, which aims to unify the brand’s performance styles in the football, running, training, fitness and golf categories.

For the full year, revenue increased 8.7 percent to 3.27 billion euros, or $4.36 billion. However, net income plunged 69.5 percent to 70.2 million euros, or $93.6 million, from 230.1 million euros, or $306.9 million.