Puma on Wednesday cut its '15 profit outlook "after the strong U.S. dollar hit" its Q1 earnings, "overshadowing strong footwear sales following the launch of a new running shoe" by Jamaican sprinter Usain Bolt, according to Emma Thomasson of REUTERS. Puma's Q1 net profit fell 30% to $27.9M on sales up 13% to $924.8M. The sportswear industry "sources the vast majority of products from Asia in U.S. dollar contracts, while Puma makes a large chunk of its sales in currencies that have fallen against the greenback, squeezing margins." Puma "has been spending heavily on marketing and sponsorship, including ousting Nike as kit supplier" to Arsenal, "as it tries to restore its reputation as a sports performance brand after it strayed too far into fashion" (REUTERS, 5/6). BLOOMBERG's Corinne Gretler reported London-based MainFirst analyst John Guy said, "The company clearly got caught short in terms of currency movements based on what was hedged and not hedged. However, this shouldn't derail Puma's long-term investment plan." Puma CEO Bjoern Gulden "has been focusing on a recovery program to revive growth." Puma's plan "includes introducing new shoes for soccer and running and winning retail space" (BLOOMBERG, 5/6). In London, James Shotter reported shares in Puma fell 7.2% in "early trading before regaining ground." Puma said that the strong dollar "would lead to a steep decline in profits this year." The company is focused on "developing more innovative sports products, improving the way its goods are marketed in stores and increasing its appeal to female customers" -- to which end it "signed pop star Rihanna as a creative director last year." It is also "spending heavily on marketing, and last year struck its largest-ever kit sponsorship deal," with Arsenal. The profit warning "overshadowed a sharp increase in Puma's first-quarter sales," which came in at €821M ($933M), 13% higher than in the same period a year earlier (FINANCIAL TIMES, 5/6).
