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The global fashion business journal

Dec 7, 20196:11pm

Puma wants to be fashion: is it profitable?

The German company, until last year owned by Kering, has collaborated with singers and celebrities to face its conquest of urban fashion.


Nov 25, 2019 — 8:57am
Daniela García
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Puma wants to be fashion: is it profitable?

 

 

From gyms to the street. As Puma gained independence from Kering, the brand has been embracing collaborations with celebrities to position itself as a fashion brand. The context was perfect: athleisure was imposing as the trend. But does it compensate?

 

The German company has increased its sales by 84.4% in the last ten years, from around 2.5 billion euros in 2008 to more than 4.6 billion euros. In the same period, the company’s profit has exploded, up to 187.4 million euros, although the margin has dropped, standing at 48.4% last year.

 

The turning point came in 2015, with the incorporation of Rihanna as the new creative director. The arrival of the singer returned brightness to the results of Puma: after two years in decline, the sales of the brand skyrocketed that year by 12.3% and have remained upward since.

 

Profitability was also up. After reducing its net result by 14% in 2013 and 0.2% in 2014, the net result of the group rose in 2015 with an increase of 10.1%. The margin, meanwhile, has remained up since, going from 45.5% the year Rihanna entered to 48.4% in the last year.

 

However, Puma’s commitment to fashion began long before. In 2007, the company shyly began to approach collaborations with a giant of the sector, Alexander McQueen, who did a collection with Hussein Chalayan. 

 

In 2009 everything took a fashion turn. During the London fashion week, the company presented a collection that was a declaration: Out of Sport, Out of Fashion. The campaign called it a decade of sport and fashion.

 

During the crisis the company maintained a low profile. The company’s sales were weakening until they hit lows in 2013, when revenue fell 9.6% and profit sank 13.8%. The margin fell to 46.5% and the company reacted with more fashion.

 

In 2015 the company reinforced its commitment to fashion with Fenty X Puma. The Future is Female was the campaign that the company used for its collaboration with the singer. Seeing that it worked, more came, The Weeknd, Kylie Jenner and Cara Delevigne joined the wave of co-creation.

 

The last one was with the American singer Selena Gomez, who joined the company in 2017 to continue its conquest of urban fashion. The collection with the singer, Thunder, wants to reach a younger generation of consumers.

 

Bjorn Gulden, chief executive officer of Puma, said in his latest annual report that “these partnerships we have made with Rihanna and Selena Gomez have defined a new way of interacting with influencers.”

 

“Puma constantly works with the most relevant cultural and fashion icons to connect with audiences that set trends, this has made Puma one of the most desired sports and fashion brands for the younger generations.”

 

In parallel, the company has been carrying out its plans while Kering, who bought it in 2007 for 5.3 billion euros, decided to divest in the sports fashion company last year to focus on its sector.

 

The German company was founded in 1948 by businessman Rudolf Dassler. Puma closed last year’s fiscal year with sales of 4.6 billion euros and a net profit of 187.4 million euros. 

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