Despite the a summer packed with major sporting events, with the Olympics starting this week and the European Cup football recently finished, Puma announced a decline in its net earnings and lowered its expected turnover growth from 10% to 5%.
Crisis is a damper
The economic crisis in Europe results in consumers spending less money, which is bad news for the German sport lifestyle company that achieves 45% of its turnover in Europe.
Net earnings dropped by 13% in the first half of this year (despite the fact that sales had gone up by 8.8%), due to an expensive reorganization which was necessary to better organize the company. In the second semester of this year, the cost could even amount to 100 million euro.
Other big players suffer too
Puma is not the only sport lifestyle brand that suffers because of the difficult economic climate. Market leader Nike also announced a lower turnover growth in China and on Wednesday, Adidas stated that it will have to close its Chinese factory (the only factory that is company-owned) to save costs.
Big fish in other markets like Danone, Deutz and steel-company Salzgitter, are feeling the crisis as well, and American goa,ts Hewlett Packard, Procter & Gamble and Starbucks also feel that Europe is suffering from a high burden of debt.
Unsurprisingly, the lowered expectations had their effect on the stock market. Puma's shares lost 5.1% of their value on Wednesday and they have only been able to recover a fraction of these losses.
Puma was founded in 1948 by Rudolf Dassler, after a dispute with his brother and Adidas's founder Adolf. Profiling itself mainly as a fashion brand in the last couple of years, Puma is now trying to claim a spot in the world of football, currently Nike's and Adidas's playground. PPR, the French luxury group that owns Puma for 80%, confirmed to fully support the new Puma strategy.
Translation by Sanne Raspoet