Following the report of its third strong annual campaign in a row, Bjørn Gulden, CEO, Puma SE, detailed the many ways the brand’s focus on female training, its celebrity brand ambassadors and its ability to amplify its voice through social media are helping drive the company’s turnaround.

On a media call, Gulden, who took over as CEO in 2013, described the emphasis on women as “probably what turned the brand around.” He noted that a few years ago, some Puma veterans called for a re-focus on women’s “because that’s where the brand was strong 10, 15 years ago.”

The refocus was marked by its “Where The Gym Meets The Runway” initiative launched in 2015. Gulden described the campaign as “a clear statement that we want to be the most fashionable-forward sports brand and we play it 360. So it’s our ambassadors; it’s the product; it’s how we do marketing, and of course, how we hope to look in the stores.”

The “Where The Gym Meets The Runway” initiative also addressed the merging of lifestyle and sports that continues to become “stronger and stronger,” according to Gulden, and plays to Puma’s strengths. Gulden adds, “That does not mean we should only focus on lifestyle, but it does mean it’s easy to sell running and soccer shoes to a brand that is in, then from a brand that is out.”

The shift to ramp up its focus on women also came at the same time Puma decided to significantly invest in establishing influential partnerships and many of the brand’s signings of entertainers have particularly paid off.

In particular, Gulden hailed the 2014 signing of Rihanna as “probably the changing point of the brand.” The Barbadian pop star started out as an ambassador, then a designer and finally an inspiration for Puma’s design team, Gulden said.

Her latest runway collection at New York Fashion Week also epitomized “story-doing,” where the show and collection moved well beyond just an advertising campaign for Puma to become a story itself. Puma led the rankings in social media buzz coming out of the show.

Gulden said the fashion show’s success in driving awareness underscores how as a brand, “you need to create stories; you need to create content, and then of course it’s all about social media from a global point of view but also a local point of view.”

Indeed, Gulden demonstrated how Puma’s celebrity ambassadors are significantly multiplying its efforts to reach fans across social media. Puma, for example, has five million followers across Facebook, Instagram and Twitter. By comparison, the brand’s “muses,” led by Rihana, Selena Gomez, Cara Delevingne and the Weeknd, have 535 million followers. Added Gulden, “That means that their content, when they do something with or without Puma, is the driving force.”

As an example of the potential impact, Gulden noted that Gomez received 4.8 million likes and 54,000 comments last year when she revealed her first photo shoot for Puma. In one week, almost 10 million interactions were created around Puma and the American singer and actress.

Gulden noted much of these social media tools and techniques weren’t available five years ago, and how marketing has become much more “about working with partners and making sure there’s content and stories that people are interested in.”

Overall, Gulden said that while in the past, it was enough for a brand to align with the interests of younger consumers, “we have to be what they’re interested in.”

Internally, Puma is going after a “wide scale” of highly-individualized influencers between the ages of 16 to 24 described as “Generation Hustle.” To these consumers, “relevance is everything” and a brand’s stories have be “authentic” and “real.”

While its celebrity endorsers can deliver such compelling content, Puma is counting on many of its star athletes to bring its stories to life this year. One execution recently rolled out featured Antoine Griezmann, the soccer star who had been told in the past that he was too small to succeed in the sport. Usain Bolt, the legendary sprinter, is showcased racing cars, another passion of his, and will be featured as he pursues is dream of launching a soccer career. Lewis Hamilton, the British racing driver whom Gulden describes as a “fantastic athlete,” is shown in another working out with Cuban boxers and will support Puma’s training push.

Indeed, despite the brand’s success with celebrities, athletes are still needed to bring “brand heat” to Puma, and recommitting to its core sports positioning was the brand’s first priority after Gulden arrived for 2014. He also said local endorsers can be key in certain regions.

“As a brand we need to make sure that we activate things that are relevant and authentic and distinctive together with the people we work with so that we can tell stories,” said Gulden. “And the stories can be product, but it can also be about the ambassadors. Why are they so good? Why do they behave the way they do? What are they doing outside the stage? And then there are events, sporting events, music events like the Grammys, that we can make big happenings for this kid. And then of course we need to communicate it on all platforms.”

Among its athletes, Arsenal’s Olivier Giroud won the FIFA Puskas Award for “Goal of the Year” of 2017 and Sergio Agüero broke the goal scoring record for his club, Manchester City. In golf, Rickie Fowler captured a win at the Honda Classic, and landed a record-breaking win at the 2017 Hero World Challenge, while Lexi Thompson won two LPGA tournaments.

In running, Frenchman Pierre-Ambroise Bosse won the gold medal in the 800 meters.  Bolt retired from running but will stay active in Puma’s campaigns. Andre De Grasse, who Gulden expects “will be the fastest runner this year,” is essentially replacing Bolt as its elite runner.

Gulden also called out the successful performance of many of its teams. He called its sponsored teams “very important in our teamwear business.” BVB Borussia Dortmund claimed the German DFB Cup, Arsenal F.C. won the FA Cup and Mexico’s Chivas secured the 2017 Liga MX Clausura title, while Argentina’s iconic team Independiente Buenos Aires celebrated the victory of the Copa Sudamericana.

Last week, Puma signed up to replace Adidas as the sponsor of AC Milan, which Gulden said is “probably a top-five team in football history” and a club that is “extremely popular on the Asian side of it in America.” Two other clubs new for this year are Borussia Mönchengladbach and Olymmpique De Marsielle.

As far as the upcoming World Cup, Gulden said he was “really, really sad” that Italy failed to qualify, but he noted that Puma’s teams, Uruguay and Switzerland, made the cut. The brand also just signed Senegal and is looking to sign up one more team heading to Russia. Said Gulden, “Four is fine; we don’t need 10 or 11. And many players wearing our boots will give us great visibility in in Russia.”

Besides Agüero and Griezmann, other soccer stars endorsed by Puma that will be playing in the World cup include Marco Reus, Gianluigi Buffon and Hector Bellerin.

Beyond “creating brand heat,” a second priority in its rebuilding efforts has been to “fix the product engine,” particularly in footwear.

Footwear was the main sales driving Puma’s sales in 2017, with currency-neutral sales ahead 19.2 percent in the category. Footwear margins also improved from 42.5 percent to 45.5 percent.

On the product front, the goal for Puma remains to “make cool stuff that works.” Puma has been working to “be very active,” with many launches given its smaller positioning against the bigger sporting goods players.

Puma has also worked harder on launching styles across a good, better, best approach because consumers expect product to be available across different price points and distribution channels. Said Gulden, “[The days when] we launched something and you would wait one year, two years or three years before you took it down in price point is over. Today it happens instantly.” Some examples of products resonating with women include the Basket Heart, Muse Echo, Muse, Muse Maia and Suede Bow. Gulden said product has extended to “new silhouettes that haven’t existed before for our brand.”

On the performance side, the Netfit lacing system saw a strong launch and has been extended from running to soccer. The brand’s new Jamming cushioning technology, whose e-TPU beads provide high comfort and energy return, also caught some attention.

In football, Puma has two styles, the Puma One, a classically-styled silhouette in kangaroo leather, as well as the “very, very aggressive”  Future model that was just launched.

In golf, a breakthrough was the KING F7 & F7+, smart drivers with an embedded sensor, allowing golfers to track automatically the distance and accuracy of each drive. The technology is being embedded into its golf footwear.

A third priority has been to improve distribution, and Gulden said Puma is securing more space at stores because of healthier sell-throughs.

Retailers “make money with us,” Gulden asserted, with some key styles selling out quickly and many styles landing on best-seller lists. Gulden added, ”The good thing is that retailers are acting more positive. A couple years ago it was difficult to place product with them and now there is a demand for our product.”

Wholesale sales grew 14.0 percent on a currency-neutral basis in 2017 and the brand grew double and triple digits at some of the “best and most important retailers around the world.”

Gulden also noted that in women’s, if Puma is able to establish an in-store shop at a location, the gains are in the triple digits. On the women’s side, Puma has done particularly well with, the British online fashion and beauty store. The brand has worked “extremely close with them with quick response programs,” and some turnaround times have only taken a few months “to be on trend and it’s working very well.” Another “very, very positive development” on the women’s side has been Germany’s

A final key priority has been to simplify the organization, and a big payback has been a shift to centralizing ordering and trading that has helped supplier partnerships. Said gulden, “We also want to be fast in solving problems with our partners. We should be the nice guy in the industry.”

Some key stats for 2017 include:

  • Full-year sales increased 15.9 percent currency adjusted to €4.14 billion (+14.0 percent reported), passing the 4 billion sales mark for the first time;
  • The EMEA region’s sales rose 19.5 percent currency
  • adjusted to €1.64 billion (+19.1 percent reported). France, the DACH region (Germany, Austria and Switzerland) and the U.K. as well as Russia and South Africa delivered double-digit sales growth.
  • The Americas region went up by 14.3 percent currency adjusted to €149 billion
  • (+11.6 percent reported), with both North and Latin America contributing with double-digit growth rates.
  • In the Asia/Pacific (APAC) region, sales rose 12.7 percent currency adjusted to €994.9 million (+10.0 percent reported). The main drivers of growth in the region were China, followed by Australia, both with double-digit sales growth.
  • Footwear continued to be the product segment with the strongest growth rate. Sales were up 23.5 percent currency adjusted to €1,97 billion (+21.4 percent reported). Running and Training as well as Sportstyle were the categories with the strongest growth rates.
  • In the Apparel segment, sales rose by 10.0 percent currency adjusted to €1,44 billion (+8.1 percent reported). The Sportstyle category, and especially women’s products, contributed to the increase.
  • Sales in Accessories grew 9.2 percent currency adjusted to €719.9 million (+8.0 percent reported). The increase is mainly driven by socks, underwear and headwear as well as bags and backpacks, while Puma golf hardware business remained stable.
  • Including e-commerce, PUMA’s owned and operated retail sales rose 22.9 percent currency adjusted to €961.0 million. This represents a share of 23.2 percent of total sales in 2017 (21.9 percent in 2016). The gains were driven by a strong like-for-like sales growth in its retail stores, the extension of its retail store network and a strongly growing e-commerce business.
  • Gross profit margin up 160 basis points at 47.3 percent;
  • Improved operating leverage with operating expenses (OPEX) increasing by only 7 percent;
  • Operating result (EBIT) improves significantly from €128 million to € 245 million;
  • Net earnings more than double from € 62 million to € 136 million and EPS increases from € 4.17 to € 9.09;
  • Free cash flow improves strongly from € 50 million to € 117 million;

For the current year, Puma’s three priorities are to continue the momentum in women’s, accelerate growth in men’s and “ignite the team sports business where we’ve been lagging behind.”

On the lifestyle side, Gomez will “take a big part in women’s communications” with the launch of new own signature luxe pack collection, Defy.

The Suede model is turning 50 in 2018 and a collaboration with Hello Kitty over the prior weekend “blew out,” with consumers “lining up around the world.” Another Suede collaboration has come out with Fubu and a number of other collaborations are being planned “with music, fashion, street culture and also pop culture,” according to Gulden.

Futro, a new category blending future and retro, is expected to increase in importance as trend. The approach basically updates older uppers and designs is represented by the Thunder Spectra and RS-O from Puma. Said Gulden, “We hope to lead the category, but you’ll see if more form others.”

In football, Gulden believes the brand “now has competitive product in two silos” with the Future and Classic One. Different colors and materials will be arriving throughout the year to support sales. Said Gulden, “For the first time I am convinced that we’re going to have real growth in football.”

In running, Puma will look to build on the strong receptions to innovations such as the Jamming and Netfit, and has big expectations around the launch of a Hybrid foam cushioning system

In golf, Cobra Puma Golf plan to build on its tech innovation story and the brand will also be relaunching Pumatrac, which now includes training tips from Usain Bolt and Lewis Hamilton.’

Looking ahead, Puma said it expects sales to grow about 10 percent in 2018. Gross margins are expected to improve slightly to 47.3 percent.  Operating expenses (OPEX) are expected to increase at a mid to high single-digit rate, as Puma will continue to invest in marketing, retail and IT.

(EBIT) in 2018 will improve significantly, to between €305 million and €325 million versus €244.6 million in 2017, due to higher sales and a slightly improved gross profit margin. As a percent of sales, EBIT is expected to improve to about 7 percent, up from 6 percent yet still beyond its long-term target of 10 percent.

Gulden said, “Our attitude is to hustle. We are not 16 to 24 but have to hustle because we are in a challenged position. But I think, and I’ve said this before, this brand really, really deserves even more sales and more profits than we’ve given it. We feel we are on the right track and we are very positive about the future.”

Photo courtesy Puma