Puma First-Quarter Profit Rises on Strong Footwear Sales -- Update

By Ellen Emmerentze Jervell 

FRANKFURT-- Puma SE said Friday its first-quarter profit rose 4%, boosted by strong footwear sales.

The German sporting goods firm, a division of Kering SA, said net profit was EUR25.8 million ($28.3 million) in the first three months of the year, up from EUR24.8 million a year earlier. Sales rose 7.3% when adjusted for currency effects, to EUR852 million. The company's footwear business was the main growth driver, with sales increasing in the segment for the seventh quarter in a row.

"The first quarter of 2016 developed as we expected," said Puma Chief executive Bjørn Gulden. "Both in our own retail and with our retail partners we see a continuous improvement."

The improved numbers are timely for Mr. Gulden, who has been working on turning around Puma since he took the company helm in 2013.

In the early 2000s, Puma experienced tremendous growth in the lifestyle and fashion segment. However, with trends shifting, its sales tumbled. Mr. Gulden has worked to shift the company's focus back to sports and performance, paying particular attention to female consumers.

Some analysts said Puma's growth was largely a sign of a healthy sporting goods industry as such, whereas others said it was the company's focus on female training that was starting to show results.

Puma in 2014 signed an endorsement and design deal with Barbadian pop star Rihanna. The first collection, dubbed Fenty x Puma, made its debut on New York Fashion Week earlier this year.

NPD Group data earlier this year suggested that Rihanna was the most marketable of all "big name celebrities". Her resonance with consumers seems to have had an impact on Puma figures too, said NPD analyst Matt Powell.

"Many celebrities take months to lift a brand, if at all. In the case of Rihanna, the reaction was almost immediate," he added.

An earnings drawback for Puma was once again a negative impact from currency exchange rates.

A year ago, Puma lowered its guidance for 2015 because of the strong dollar against the euro. Like other sporting goods and retail firms, Puma manufactures many of its products under U.S. dollar contracts in Asia. Negative currency effects have hit Puma particularly hard, because it has limited financial muscle and can't afford to hedge all currencies.

On Friday, the company said it had raised prices and improved its product mix and sourcing in a bid to offset the negative impact from a stronger U.S. dollar.

Puma confirmed its outlook for the year.

Write to Ellen Emmerentze Jervell at [e-mail]

(END) Dow Jones Newswires

April 29, 2016 04:54 ET (08:54 GMT)

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