Being Sold To The Strongest Growth In History, What Did Sports Brand Puma Do?

Some are in deep mire, and some are out of the cold winter.

Puma is obviously the latter. The German sports brand recently announced its second quarter earnings, sales rose 16.9% to 1 billion 220 million euros, profits before interest tax depreciation and amortization rose 39% to 80 million euros, and net profits soared 59.7% to 49 million 700 thousand euros. Puma's clothing and footwear businesses were strong, respectively, by 23.6% and 15.4% respectively. Sales in the Asia Pacific market, including China, surged 21.6% to 315 million euros, while sales in the North American market rose 19.7% to 463 million euros.

In the last quarter, Puma has just recorded the strongest revenue growth in history, with sales surging 15.3% to 1 billion 310 million euros, and net profit rose 40.1% to 94 million 400 thousand euros. During the reporting period, Puma's apparel business performance exceeded its core footwear for the first time, while China and the United States became the fastest growing brand growth market, with an increase of two digits.

From the first half of the year, the sales volume of Chinese and American brands increased by 15.5% to 2 billion 546 million euros, of which clothing sales increased 24.8% and footwear increased by 11.7%.

In 2018, Puma sales rose 12.4% to 4 billion 600 million euros compared with the same period last year, while net profit rose 38% to 187 million euros, with sales of footwear business breaking 2 billion euros for the first time. Among them, Puma's net profit growth in the fourth quarter of last year achieved a shocking 624.7%.

Looking at Puma's recent performance, the steadily rising revenue and profit margins are gradually dispying doubts about how long the market can burn Puma earlier. Facts have proved that, after the end of the Rihanna contract, Puma's stamina is full, which naturally benefits from the long tail effect of the star's blessing. But at a more macro market level, Puma obviously does more things intentionally or unintentionally.

Four years ago, Puma was once at a low ebb. In the first quarter of 2015, Puma net income fell 30.3% to 24 million 800 thousand euros, a record low. Citigroup analyst Thomas Chauvet at the time said that in the past ten years, Puma's operating margin had narrowed by more than 10%.

This has disappointed the parent company's luxury giant, Kai Yun group. Puma was bought by Kai Yun group for 5 billion 300 million euros in 2007 as a landmark move for the latter to enter the lifestyle field. However, this does not have an effective value for shareholders, and the synergy effect of luxury goods is not as expected. In the years after the acquisition, Puma's return on investment capital and profits and profits are heading in the wrong direction. Although it has been trying to improve brand development direction, it has not improved.

In 2013, Bjorn Gulden was appointed CEO of the company. He hired pop singer Rihanna Rihanna to join Puma as the brand creative director the following year. Since then, the negative voice of the company has been declining and the popularity of its brand has been rising.

However, it should be noted that the accession of Rihanna did not immediately turn over the performance of Puma. It took one to two years to completely release the commercial value and change the brand's fate. Bjorn Gulden said at the time, because Puma lacks strong brand influence, it will "spend more time". He also believes that the brand is in a stage of transformation, which is why the brand is very vigilant and fast rising. He said that the process is a "marathon race, not a sprint race".

The influence of social media has been regarded as a synonym for business value, especially in the fashion industry. Although this is regarded as common sense, it was a certain vision at that time. The Creeper sneakers launched by Puma with 72 million Instagram fans, sold out in three hours, shocked the industry. (Rihanna)

The advantage of the "explosion" strategy is to let consumers feel that the brand has become fashionable, thereby driving the sale of other products of the brand. Finally, at the end of 2015, Puma's performance began to pick up.

Since then, Puma has been working extensively with celebrities and brands. Star effect and marketing input have brought immediate stimulation to their performance. In September 2017, Puma signed Selena Gomez, a singer with 140 million fans on instagram. In order to better attract young Chinese consumers, the brand also signed a endorsement contract with Liu Wen, Yang Yang, Liu Haoran, Zhang Yuqi and other supermodels and popular stars. Even enter the beauty market, and cooperate with Maybelline to launch joint beauty makeup products.

On the surface, Puma's turning over benefits from the star effect, which is not exactly the case. The addition of Rihanna has changed the Puma gene's tonality, so that Puma has gained the key weight to the next competition cycle. One is the female sportswear, the other is the fashion discourse right. This is the key for Puma's star effect to have a long tail effect. In other words, the reason why the Puma star effect works is partly due to the early start and the beginning of the trend, and on the other hand, by taking advantage of the stars to track the rhythm of the market.

Fashion is undoubtedly the most significant trend in the field of sports in the past five years. Not only is Puma, Adidas is a bigger beneficiary of fashion strategy. From Stan Smith little white shoes to coconut shoes of Kanye West, there is no need to repeat the road of rejuvenation of Adidas.

More importantly, Puma and Adidas have led to changes in the way of sports marketing. In the past, sports brand marketing was aimed at sponsoring sports stars, clubs and events, aiming at sports fans. Nowadays, with the intervention of fashion, sports brands attract more consumers who are not interested in sports, which greatly stimulate the incremental market.

The marketing budget of sports brand is rising. As early as 2017, Puma announced that it would increase the marketing expenditure of sports products, and the proportion of marketing expenditure would be between 10% and 12%. Adidas last year's marketing expenditure increased by 10% to 3 billion euros compared with the previous fiscal year, and most of it was used in the North American and greater China markets.

In China, Lining has made the brand image upgraded to a fashionable sports brand. In February last year, Lining first boarded the fashion week in New York to become an important turning point in the history of brand development. Then, in June last year, the men's week in Paris and the fashion week in New York in February this year, Lining was further bound up with fashion.

From deep selling to the strongest growth in history, what exactly has Puma done?

Since the show in Paris in June, Lining's share price has been rising steadily, reaching a new high of nearly 9 years. The picture is Lining's 2020 spring summer series.

In less than two years, Lining, who was once in a low ebb, suddenly opened up the situation, changing the brand image of a younger, fashionable and clear core brand. Last year, Li Ning Co returned to its peak after 8 years, with its revenue breaking first billion. Since its debut in Paris in June, Lining's share price has risen steadily, reaching a new high of nearly 9 years, and its market value has increased by more than 10 billion.

Lining's biggest competitor in China, Anta, has gone all the way in recent years, and has also benefited a lot from the trump card of Italy sports fashion brand FILA. FILA has recently become the new favorite of young consumers all over the world. FILA grew more than 80% in China last year, becoming the biggest engine of growth for Anta and the first fashion week in Milan in 2018.

During the Tmall 618 period this year, sales of FILA broke rapidly. In June 1st, the flagship store of FILA Tmall jumped more than 1500%, of which the sales of new RAY RAY shoes grew by an annulus increase of 4800%. The goal of FILA in the future is to enter 10 billion clubs in three years and upgrade from sports Nouveau to top three brands in the domestic high-end market.

From deep selling to the strongest growth in history, what exactly has Puma done?

FILA has become the new favorite of young consumers all over the world.

The acquisition of FILA China's operation rights has proved to be one of Anta's most successful strategic initiatives so far. Group executive director and Anta brand President Zheng Jie even said that without the acquisition of FILA, Anta would hardly make the decision to acquire international sports giant amamin sports. Anta was hit by muddy water sniping on sale last month, although its FILA has become the focus of doubt, the group's stock price has risen ten to a record high.

Fashion, marketing, social media, three things are closely related to each other. In the final analysis, sports brands are using fashion language to talk with young women who love fashion, as well as young people who are familiar with the world through social media. These two groups are consumers who are competing for almost all industries.

From a more practical level, Puma has finally strengthened the female sportswear category with the help of star effect and fashion. Bjorn Gulden said that after the accession of Rihanna, Puma has strengthened its influence on the women's sports market. Before that, the women's sports products of Puma were few and far between. In the third quarter of 2017, Puma women's clothing business increased by more than other businesses.

Facts have proved that female sports apparel is the "gold mine" in the future sports market.

According to data from market research firm NPD, in the third quarter of 2017, the growth rate of female products in the American sports shoes market reached 6%, while men's shoes and children's shoes were basically flat. Between January and November last year, women accounted for 62% of the total sales of sportswear in the United States, while women spent 188 dollars per year on sports equipment, while men spent 178 dollars on that category.

　　 Women spend more on sports equipment than men.

According to the latest QuestMobile data, with the trend of sportswear and sports shoes, female consumers are gradually entering the male dominated sports shoes market, and the female consumers of sports fashion consumers and fitness groups also surpass Men for the first time this year.

Zhu Jinqian, general manager of Nike Greater China, told Tencent news interview that women's attention to sports fitness has increased significantly, which is closely related to urbanization, people's willingness to exercise, and to express themselves through sports style.

In view of the good prospects of the women's sports market, Nike put forward a ambitious plan in 2015, when the "Five Year Plan" was put forward in 2015. The sales volume of its female products reached 11 billion US dollars in the 2020 fiscal year, and the proportion in the total annual revenue will exceed 20%.

In recent years, adidas has also begun to take the initiative to break the stereotype of female consumers in sports. The new strategic focus is to increase investment in women's sports and leisure markets, not only to promote more women's sports products, but also to enhance the sense of existence of women's clothing in stores, and this year to cooperate with Beyonce's personal brand Ivy Park.

Canada's sportswear brand lululemon has become the biggest black horse in the industry by relying on women's Yoga oriented business structure. In just a few years, it has replaced Under Armour as the third most popular sports brand and continues to grow.

In the past three years, the annual compound growth rate of lululemon net profit was 27%, and the compound annual growth rate of revenue was 16%. In the first quarter of May 5th, the brand sales rose 20% to 782 million dollars, the same store sales increased 14%, and net profit increased 28.6% to 96 million 600 thousand dollars.

According to the fashion business express, lululemon's stock price has increased by 54% this year and its market value has reached US $24 billion 890 million, a record high. Lululemon chief operating officer Stuart Haselden revealed that China has become the biggest potential market for brands. The first quarter's revenue growth exceeded 100%. This year the brand will add 10 to 20 stores in the market.

In the face of such a fierce trend, the American sports apparel brand Under Armour has become the biggest loser.

Fashion and women's sports business has always been the weakness of Under Armour, which has not yet come out of its performance. Puma's performance has surpassed Under Armour for two consecutive years and has replaced its third major sports brands.

In the three months ending June 30th, Under Armour's sales volume was $1 billion 190 million, almost no growth compared with 1 billion 170 million US dollars in the same period last year, but net loss has narrowed to 17 million 300 thousand US dollars, a net loss of 95 million 500 thousand US dollars in the same period last year. However, after the two quarter financial report was released, Under Armour shares still suffered a setback in the intraday market, which once dropped 18%, and reported a 24.08 decline on the same day by 12.21% decline, setting the biggest decline in the Under Armour share price since the end of 2017, and the market value evaporated nearly 1 billion 500 million US dollars.

In fact, Under Armour has released the resurgence signal. Brand chairman and chief executive officer Kevin Plank said the second quarter's performance means that the transformation strategy of the group is in force. In the first quarter, brand sales increased by 2% to $1 billion 200 million over the same period, exceeding analysts' expectations. Net profit was recorded at $22 million, a substantial improvement over the 30 million 200 thousand US dollar deficit in the same period last year. Brand performance exceeded expectations in the third quarter of last year, turning losses into profits in the fourth quarter.

Facing the market trend of young consumers inclined to sports and leisure, Under Armour, who specializes in professional functions and men's sportswear, is also trying to make changes. In March of this year, Under Armour announced that Kasey Jarvis would be the chief design officer, and Kasy Jarvis had worked in Nike. In June, Under Armour announced that the popular idol Yang, who owns 10 million micro-blog fans, has gone beyond the formal accession to the brand. The move has aroused heated debate, with users asking questions in social media, "how to evaluate Yang Chaoyue and professional sports brand?

Mei Yuqing, managing director of China Under Armour, said in an interview with lazy bear sports that with the cooperation of Yang Yue, the brand hopes to convey to consumers a message. Under Armour is not only suitable for the most professional athletes, but also can meet the needs of sports enthusiasts. Yang Chaoyue, as a girl student who likes sports, conveys the brand purpose to female audiences and young audiences.

However, Neil Saunders, managing director of GlobalData, said that almost no consumers, especially female consumers, had a substantial change in their views on Under Armour. The Puma star strategy triggered a sensation that failed to repeat itself at Under Armour. Yang Chaoyue signed neither a large number of female consumers for the success of the brand, but also a dissatisfaction among some loyal consumers.

Obviously, Under Armour still hasn't found a suitable position between professional sports orientation and fashion younger. Earlier, Under Armour admitted in its earnings report that its fashion transformation failed, aiming to target basketball and other professional sporting goods market in the future. (reading: Under Armour's hard choices, fashion or functionality?)

Stepping into the industry rhythm is more important than anything else. The fundamental reason for the deterioration of Under Armour in capital market is that its pace is a bit late than the market.

At the moment, Puma, Adidas and Lining, who rely on fashion and star effect, have begun to return rationally after the market craze, emphasizing their professional foundation and returning to the professional basketball, football and running fields. But with sufficient cash flow and performance to endorse, their pace is much lighter than that of Under Armour.

The first importance of sportswear group should be linked to professionalism. Puma made a major strategy to return to the basketball market last year. After 17 years, it launched a new basketball shoe called Clyde Court Disrupt, and signed hip hop superstar Jay-Z as chief executive of basketball, taking part in the formulation of signature, product design and marketing strategy of brand players.

In addition to the basketball shoe business, Puma is continuing to consolidate its position in track and field, comprehensive training and football. After relying heavily on Jamaica's flying Boulter in the field of running, Puma has become a sponsor of AC Milan. With the arsenal, Dortmund and Italy national teams, Puma almost caps international mainstream sports resources. According to the results of the financial report, running shoes are the most powerful category of sales in 2018.

Adidas CEO Kasper Rorsted also stressed in the interview that sports business is still the core of the adidas group. Football, running and rugby football will be the focus of this year's development. As the dress becomes more and more casual, the casual sports products will have broad market prospects. Adidas has also reached strategic cooperation with Foot Locker, an American sports shoe retailer.

Lining launched the fashion line and professional balance by launching the Lining fashion line independently. Earlier analysis said that Lining's ultimate ambition has become a fashion brand, which means that the brand has abandoned the solid professional sports foundation laid down over the years. With the introduction of Lining's fashion line, the group's layout of the fashion business is relatively clear. That is not the overall fashion of the group level, but is committed to the development of fashion as an independent business while adhering to the professional sports positioning as the core.

As a result, the question of deviating from orbit was gradually dispelled. Lining, general manager of fashion line Li Gang, told fashion headlines that Lining hopes to accumulate experience through other fashions such as basketball and running. Taking fashion as the breakthrough point, the ultimate goal is to hope that all product lines can be developed.

In today's deep globalized complex market, it is very difficult for an enterprise to achieve "dramatic" comprehensive rejuvenation. When we look back at the market cycle just now, it is easy to see that Puma, Adidas or Lining have made the right decisions in the right time, and there are lots of luck in them. Business history has proved countless times that the revival of enterprises is always a product of coincidence and coincidence. No one knows what will become an opportunity, but the fate of a company may be profoundly changed by inadvertent decisions.

The market is changing rapidly, and no one can guarantee that it will catch up with the next market opportunity.