Puma hails Rihanna brand impact, fears discounts
BERLIN: Puma expects gross margins to be squeezed by discounting in the fourth quarter, despite a new collection from singer Rihanna helping the German sportswear company raise its 2017 sales and operating earnings outlook.
Puma said on Tuesday that third-quarter sales rose a currency-adjusted 23 percent in Europe, Middle East and Africa, 16 percent in the Americas and 10 percent in Asia/Pacific.
Like its German rival Adidas, which reports results on Nov. 9, Puma has been enjoying a revival in the US market, as shoppers snap up its retro styles instead of basketball shoes, hurting Under Armor and Nike.
“Rihanna’s relationship with us makes the brand actual and hot again with young consumers,” Chief Executive Bjorn Gulden told a media call, adding that growth in Puma’s gear for women was outstripping other areas of the business.
Puma, which was bought by French luxury goods company Kering in 2007, had been struggling for years, but analysts expect Kering could seek to sell its stake in the course of 2018 now that the German brand is performing well again.
Gulden cautioned that fourthquarter gross margins could be weaker due to heavy discounting, particularly in the United States where retailers are struggling, and in Europe, due to mild weather deterring shoppers from buying winter gear.
Nike last month posted its slowest quarterly sales growth in nearly seven years in the face of intensifying competition from Adidas and Puma and a looming price war amid retailers.