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Volume 10 No. 22

Finance

Puma is "counting on the trend of sneakers invading schools and offices to continue unabated, bolstering its growth as an independent company," according to Sachgau & Weiss of BLOOMBERG. The German sportswear company said Monday that it "expects operating profit to rise by as much as one-third this year as its sneakers and hoodies find their way into more young shoppers’ wardrobes." The forecast comes after Puma's majority owner, Kering, last month said that it "plans to pass on most of its stake to investors to focus on luxury brands like Gucci," with shareholders voting on the proposal on April 26. Booming demand for suede sneakers, classic tracksuits and other “athleisure” wear helped the company surpass €4B ($4.9B) in sales for the first time, as Nike and Under Armour in the U.S. are "losing ground." Puma recently added actress Selena Gomez to its sponsorship roster alongside singer Rihanna as it "shifts marketing expenses away from television to online media" (BLOOMBERG, 2/12). REUTERS' Emma Thomasson reported despite the fact Italy, whose kit Puma provides, will not play at the World Cup, Puma CEO Björn Gulden said that he was "confident" the company's football sales would recover in '18 due to "popular new shoes worn by top players," adding that it hopes to sign another one or two World Cup teams. Gulden: "We think 2018 will be a turnaround year for our soccer business." Puma's social media campaigns for '18 will "put a big focus" on Formula 1 driver Lewis Hamilton and Gomez. Puma last week agreed to a partnership with the Senegalese Football Federation, bringing the number of World Cup teams it is sponsoring to three, along with Switzerland and Uruguay, "well behind" adidas and Nike, which "dominate the market." Puma reported quarterly EBIT more than doubled to €30M ($37.8M) on sales that rose by a currency-adjusted 14.5% to €1.04B ($1.28B), "broadly in line with average analyst forecasts" (REUTERS, 2/12).

Sports Direct plans to open esports areas in some of its stores "as it increases its collaboration with specialist games retailer Game Digital," according to the BBC. The retailer will "allow space in which to sell both physical gaming products and for players to meet and compete." Game Digital said that Sports Direct paid £3.2M ($4.4M) for 50% of its Belong business, "which provides gaming arenas." Game launched Belong about a year ago in the Manchester Trafford Centre. It now runs 10 such venues. Game Digital also hosts esports festivals under the name Insomnia. Sports Direct, which is run by Founder Mike Ashley, previously said that it "wanted to become the Selfridges of sports retailing." Selfridges is known for offering "experiences" to shoppers as well as selling physical products (BBC, 2/12). 

OVERWATCH LEAGUE: THE ESPORTS OBSERVER's Thiemo Bräutigam reported the Overwatch League is "performing significantly better than many expected, including league executives and involved team owners." The league’s revenues are "exceeding its original projections by about four-times," according to sources. That is "good news for the owners and ownership groups" behind the 12 franchises that made it into season one, but "not so much for those eyeing a spot in season two." In its earnings call on Thursday, league organizer Activision Blizzard confirmed it will "raise the already steep buy-in." Sources are expecting a raise from $20M to a reported $35M-$60M (THE ESPORTS OBSERVER, 2/12).

For more coverage of the business of esports, visit our partners, esportsobserver.com.