ZURICH (Reuters) - Puma (PUMG.DE) had to scramble to respond to a sudden trend for oversized, chunky sneakers in the last few months, the chief executive said on Thursday, as the German sportswear maker dashed hopes for another hike to its earnings guidance.
Second-quarter results were dented by a stronger euro, a lacklustre performance for its sponsored national teams at the soccer World Cup, and the fact it spent heavily on basketball marketing ahead of the launch of products later in 2018.
During the quarter, Puma had to bring forward plans for chunkier styles like “Thunder” shoes due to demand from retailers as the fashion industry responded to the “ugly” trend for baggy clothing and 1990s sneakers with spongy soles.
“It’s been a tough quarter to try to react to it as we had to accelerate our sourcing very quickly... I would have wished we were faster,” Chief Executive Bjorn Gulden told reporters, adding he expects the trend to continue for the rest of 2018.
Under Gulden, Puma has revived its fortunes in recent years by spending heavily on top soccer teams and players and partnering with celebrities like singer Rihanna.
That, and upbeat recent earnings from market leader Nike (NKE.N), had raised analyst expectations that it might lift its 2018 outlook as it seeks to catch up on profitability with Nike and German rival Adidas (ADSGn.DE),
However, Puma left its operating profit target at between 310 million euros and 330 million euros ($363 million to $387 million), even as it lifted its forecast for a currency-adjusted rise in sales to 12 to 14 percent, from 10 to 12 percent.
Its shares, which have risen more than a quarter this year, were down 5 percent at 0929 GMT.
Second-quarter sales rose a currency-adjusted 15 percent to 1.05 billion euros, slowing from a 21 percent jump in the first quarter. Operating profit came in at 58 million euros, slightly shy of analyst forecasts, according to Thomson Reuters Eikon.
Gulden said that Puma had incurred marketing costs, but no sales yet, as it prepares to relaunch basketball products for the first time in 20 years in late September or early October.
Puma announced last month that rap mogul Jay-Z will be its creative director of basketball, which it sees as critical to boosting menswear sales in the U.S. market, where deals with Rihanna and Selena Gomez have made it popular with women.
While national squads wearing Puma jerseys did not perform so well at the soccer World Cup, France’s Antoine Griezmann and Belgium’s Romelu Lukaku, who wear Puma shoes, were second and third top goal scorers at the tournament.
That should lift sales of football boots, Gulden said, with Puma’s soccer order book for the second half also helped by the launches of new shirts for sponsored clubs like AC Milan.
Gulden said his concerns had receded about possible U.S. tariffs on footwear produced in China, but he was now more concerned about trade tension with Turkey and still likely to look for suppliers that can source from several countries.
Reporting by Emma Thomasson; Editing by Maria Sheahan and Angus MacSwan