German Sports Brand Puma Gains Fall Plans To Raise Prices

　　 Puma Bjorn Gulden, chief executive, said in a conference call that a strong currency disadvantage weakens the company's profitability, plans to raise product prices, increase local procurement and reduce operating costs in emerging markets. In addition, the company announced a lower profit forecast, mainly because Russia, Brazil, Argentina and Turkey and other countries rely on higher profitability to face the impact of the dollar, plus higher marketing, information technology and retail investment.

Affected by the strong monetary disadvantage, the net income of the German sports brand Puma dropped 30.3% to 24 million 800 thousand euros (about 28 million US dollars) in the first quarter, and the negative earnings warning caused the stock market to fall 5.7% to 168.70 euros (about 190.63 US dollars).

According to the company's financial reports, Puma sales rose 13.2% to 821 million 400 thousand euros (about 926 million 900 thousand US dollars) in the first quarter. Excluding currency exchange rate fluctuations, the growth remained at 4.4%. Due to the negative impact of currency, the company's gross profit margin (a key indicator of profitability) fell from 48.5% to 46.9%, and the EBIT (pre tax profit) of the whole year was between 80 million -1 billion euros (about 86 million 800 thousand -1.085 billion dollars). Puma chief executive Bjorn Gulden pointed out that "net income will be affected."

By category, the company emphasized that sales in this quarter were significantly higher than expected, mainly due to an increase of 7.8% in footwear sales. Sports socks and sports socks clothing The series was affected by North America only with lower sales and accessories by 4.6%.

By region, Asia has recorded strong growth, especially in China. The US region has performed well, but the west coast has been slowed down by the impact of the port strike and the delivery problem. Excluding the impact of currency exchange rates, sales in three regions of Europe, the Middle East and Africa increased by 0.2%, while the US and Asia Pacific region recorded an increase of 5.6% and 10.9% respectively.

Bjorn Gulden, chief executive of Puma, said in a conference call that the strong currency disadvantage undermines the profitability of the company. It plans to raise product prices, increase local procurement and reduce operating costs in emerging markets. In addition, the company announced a lower profit forecast, mainly because Russia, Brazil, Argentina and Turkey and other countries rely on higher profitability to face the impact of the dollar, plus higher marketing, information technology and retail investment.

Like many clothing and footwear companies, most of Puma's goods come from Asia, which are calculated in US currency and then sold to many non US dollar markets. Therefore, Puma has increased the price of Russian retail stores by more than 25% this year, and the wholesale channel price has increased by more than 10%.

Puma chief executive Bjorn Gulden explains, "basic business is basically the same, but the effect of currency exchange rate is still very strong. We have to change the direction of our guidance. The price will be further increased in the second half of the year. " He stressed that Puma is not made in Russia, so there is less space to manipulate it. The price of Mexico has increased by 6%, and another 6% of the price increase is about to begin.

The company plans to increase production of clothing and footwear products in Mexico and Argentina to cope with currency and inflation fluctuations. Puma chief executive Bjorn Gulden pointed out that this would take "time" because Puma lacks strong brand influence. Gulden believes that "we are in a stage of transformation". This is the reason why we should be careful in raising prices too fast "and describe the process as a" marathon race, not a sprint race ".

Puma's running shoe IGNITE, launched this spring, is the company's main product. The high performance running shoes use innovative foam technology, which has excellent energy feedback effect and helps to run activities continuously. It is also the world's first runner Usai Boulter Usain Bolt's first running shoes.

Puma is under the banner of Kering group. brand The group's first quarter results showed that its luxury sector sales fell 2.6%, of which Gucci fell 7.9%, while the sports and lifestyle sectors rose 3.7%, mainly due to the growth of Puma. Puma still lags behind its larger rivals Nike and Adidas, so it will bet on the cooperation with female singer Rihanna. Rihanna is also the creative director of the latest brand ambassador and women's fitness training product line. The company hopes to enhance the brand image and change the brand's destiny.