Puma CEO Bjorn Gulden admitted on Friday that "arch rival adidas was on a roll due to the popularity of its retro sneakers, but he believed a deal with singer Rihanna would help the smaller German sportswear firm get back in the game," according to Emma Thomasson of REUTERS. The two brands have a "fierce rivalry that dates back to their foundation by two brothers who fell out in the late 1940s in the small southern German town of Herzogenaurach." Both have launched "big marketing drives" since '14 after "struggling against fierce competition from Nike," but adidas has "returned to form more quickly, helped by the popularity of relaunched Superstar and Stan Smith shoes." Compared to the much bigger Nike and adidas, Gulden said that Puma was "still struggling to get space at retailers, although its popular retro suede sneakers and new women's products were prompting distributors to call to ask to stock its range again." Gulden made the comments after Puma reported quarterly net profit rose 4% to €25.8M ($29.5M), "while sales rose a currency-adjusted" 7.3% to €852M ($975M), slightly shy of average analyst forecasts. The firm confirmed it "expects sales to grow by a high single-digit percentage this year, while it sees its gross profit margin remaining flat" from last year's 45.5%, with operating earnings between €115M ($132M) and €125M ($143M) (REUTERS, 4/29). BLOOMBERG's Aaron Ricadela reported the "dollar’s strength has left Puma’s gross margin little changed" and sales growth at less than 4% despite the company’s promise of "high single-digit" growth for the year. The profit margin was 46.8% last quarter and it has "been falling the past few years." Gulden said, "You're trying to increase prices at the rate the market can take it." Puma’s performance "should get a boost" from the upcoming Euro 2016 and Copa America football tournaments on two continents this summer, and Gulden said that new merchandise "would hit stores coinciding with the games." He added that "the summer Olympics in Brazil would have a smaller effect on sales" (BLOOMBERG, 4/29).
