Puma Looks To Restructure To Battle Weak European Markets
Puma will "reduce the number of products it sells and cut back sponsorship deals in its biggest reorganization in 20 years as it battles weak European markets it fears will anytime not get better soon," according to Victoria Bryan of REUTERS. Puma, which is third in sportswear sales behind Nike and adidas, has been "struggling to find its feet after focusing too heavily on fickle fashion markets." Just last week, Puma warned '12 profits would miss forecasts after "its core European customers held back on spending." Puma reported a 29% "slump" in the second-quarter net earnings after it increased marketing spending ahead of the Olympics and Euro 2012. Puma CEO Franz Koch said, "Growth in Europe has stopped. We believe that the macro economy will not improve, if anything the opposite will be true, especially here in Europe." Shares in Puma rose 5.6% to €224,90 ($276,63) after the measures were announced. Kock confirmed that "a target to increase sales" to €4B ($4.8B) by '15, despite "forecasting sales growth would slow over the next two quarters." The firm will "take a knife to its network of own stores in Europe and North America, reduce the number of warehouses it runs and reshuffle its regional management in Europe." It will also "stop producing country-specific products and terminate underperforming sponsorship deals before they expire." The overhaul is the biggest at Puma since previous CEO Jochen Zeitz' "drive in the '90s to drag a loss-making business back into profit" (REUTERS, 7/26).