Market Watchers Lukewarm on Puma

Market Watchers Lukewarm on Puma
A Puma Lab, opened in Atlanta with Foot Locker.

Puma is banking on revenue from the World Cup soccer tournament and a sharper focus on sportswear to offset adverse currency effects for the full year, according to market watchers.

Christopher Svezia, an analyst with Susquehanna Financial Group, said the firm remains under pressure as it attempts to stage an image overhaul amid sluggish sales and increased competition in the athletic space.

“Puma continues to be in transitional purgatory relative to its peers. I think they are trying to create brand emotion, but it has to come with product,” he said, noting that Nike, Adidas, Brooks, Skechers and Asics are continuing to take market share.

On management’s comments about an expected sales boost from major upcoming sporting events, Svezia said, “The World Cup will help this year, but in the U.S, at least, its seems pretty quiet for the Puma brand from a product perspective.”

Antoine Belge, an analyst at HSBC, highlighted the fact that Puma is relying on a stronger second half to meet its guidance for flat sales for the full year.

“The important factors regarding Puma are that the order book for the second half is up year-on-year, [in addition to] Foot Locker opening Puma corners in circa 125 stores in the U.S., and that the new, charismatic CEO, Bjorn Gulden, is boosting the morale of Puma’s employees.”

Gulden attempted to alleviate investor concerns about the company’s ongoing transition phase when delivering Puma’s first-quarter results, commenting, “We know that the repositioning of Puma and the turnaround of the business will take time, but I am convinced that we are progressing well on all our key strategic priorities and that we have initiated the right projects to make 2014 the start of the turnaround.”

Meanwhile, sales of footwear, which account for almost half of Puma’s total revenue, continued to slide, falling by an adjusted 7.1 percent in the first quarter as a positive reception for the new EvoPower soccer boot failed to make up for a decline in its motorsport business.