Puma outlook jumps as basketball launch goes well
today Oct 25, 2018
German sportswear firm Puma raised its outlook for full-year sales and operating profit on Thursday as it reported strong sales growth in the Americas and Asia and said its first basketball shoe in 20 years had been well received.
This is the second time this year that Puma is raising its full year outlook and the news kicked its shares up 9 percent in early trade.
Puma has been growing sales faster this year than its bigger German rival Adidas and market leader Nike, helped by a big focus on soccer and partnerships with celebrities like singers Rihanna and Selena Gomez.
It is now making a drive to widen its appeal in the U.S. market by returning to basketball, naming rap mogul Jay-Z as its creative director for the sport and signing deals with four top picks in the National Basketball Association (NBA) draft.
Chief Executive Bjorn Gulden said the pre-launch of its new basketball line in late September had gone well: “Although it is very early days, the sell-through of our first shoe model has been very positive.”
Puma said it now expects that currency-adjusted sales for 2018 will rise between 14 and 16 percent, up from a previous 12 to 14 percent.
Operating profit will come in at 325 million to 335 million, up from a previous target range of 310 million to 330 million, Puma added.
NO COOLING OFF
Puma saw third-quarter sales rise almost 16 percent in the Americas in the quarter and 23 percent in Asia, even as concerns grow that a trade war between Beijing and Washington will curb spending by Chinese shoppers.
“We have not seen any sign that consumption is slowing down in China, also in October,” Gulden told journalists.
Nike disappointed Wall Street last month by not raising its full-year forecast despite a sales boost from an ad campaign with Colin Kaepernick, the quarterback who has stirred controversy by kneeling during the national anthem at games to protest police shootings of unarmed black men.
Puma has also attracted attention this month with a campaign to mark the 50th anniversary of U.S. sprinter Tommie Smith’s black-gloved salute at the 1968 Olympics.
In Europe, Gulden said sales of sneakers had slowed after a boom in recent years, with apparel the main growth driver for the quarter, helping improve profitability as the margin on clothing is up to 5 percent higher than footwear, he added.
Third quarter sales rose a currency-adjusted 14 percent to 1.242 billion euros ($1.42 billion), while operating profit was up 28 percent to 130 million, beating average analyst forecasts for 1.2 billion and 119 million respectively.
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