Puma's Q3 revenues slid 7.6 percent in the third quarter to £824.8 million ($1.14 bn) from £892.2 million, according to a revenue update from its parent, Kering. North America saw an uptick but that was offset by declines in all other regions.
Puma’s sales for the quarter were down 0.8 percent on a comparable basis. The decline was due to soft footwear sales. Accessories and apparel were up 7 percent and 4 percent, respectively.
By country, Puma’s sales in North America, representing 20 percent of Puma's sales, grew 5 percent in the quarter. In other regions, Western Europe (representing 34 percent of Puma's sales) was down 2 percent; Japan (8 percent), was down 6 percent; Asia Pacific (13 percent), slipped 1 percent; and Other Countries (25 percent) was also off 1 percent.
“Like its peers, Puma sales were again hampered by strong adverse currency impacts, particularly in Japan, which were exacerbated by strong volatility in emerging market currencies,” said Jean-Marc Duplaix, Kering’s CFO, on a conference call with analysts.
Duplaix added, “Regional trends were also contrasted with a pickup in North America. In Western Europe, which is Puma's largest market, trends were still negative, with uneven patterns across countries.”
A bright spot was “solid” results from retail, which was up 6 percent, with all three channels, main line stores, outlets, and online contributing to the improvement.
Duplaix noted that Puma implemented additional steps in its transformation plan. More than two thirds of the planned door closings are now completed. Puma also continued to work on streamlining its organization. As reported, 23 separate country organizations are being combined into seven regions.
“The Iberia region of Spain and Portugal is now up and running, on the footsteps of the DACH region, comprising Germany, Austria and Switzerland Puma has also made more progress in the consolidation of its warehouse network, with closures in Portugal and Hungary,” said Duplaix. “Reorganization is also underway to concentrate some business unit teams in a single location, and avoid duplication. For example, running, training and fitness teams are now all located in Boston.”
Regarding product assortment rationalization, Puma’s SKU count in the upcoming collection will be streamlined by 10 percent. Said Duplaix, “We are making good progress in the re-engineering of our design development and sourcing processes. As part of this, we are shutting down the product development center in Vietnam to move prototyping back to the vendors and accelerate time to market.”
Duplaix also highlighted the hiring of Torsten Hochstetter, formerly creative director at American surfwear company O’Neill, as Puma’s newly appointed global creative director as the core of a “long-haul effort” to enhance product design.
“Shorter term, Puma is on track to deliver on its full year sales guidance, which calls for sales down low to mid-single digit, currency adjusted, in 2013,” said Duplaix.
Sales at Kering's Sports & Lifestyle Division including Puma as well as Cobra, Tretorn, Volcom and Electric were down 7.6 percent in the quarter to £896.2 million ($1.24 bn) from £969.7 million. Sales were down 0.9 percent on a comparable basis. Its Other Brands portion under the Sports & Lifestyle division (Volcom and Electric) had revenues of £71.4 million ($98.5 mm), down 7.9 percent from £77.5 million.
Kering noted that Volcom’s sales were up 2 percent, “propelled by solid progression in newly launched footwear styles, and good resilience in apparel. By region, Volcom sales grew solidly in its core North American market, while trends were more volatile elsewhere.”
Sales of the Electric brand, which makes sunglasses, snow goggles, backpacks, luggage and accessories for the surf market, is still being impacted by its ongoing refocusing on accessories, “which is currently gaining speed, and product categories, such as watches, were launched in the past few days, and are off to a promising success with demand running four times faster than forecast,” said Duplaix.
