New Puma CEO seeks to return company to sporting roots

Reuters

* Q3 adj EBIT 80 mln eur vs Rtrs poll avg 81.6 mln

* Warns on 2013 profit, sees significant fall

* Fashion to come after sport

* CEO says turnaround will take time

By Victoria Bryan

HERZOGENAURACH, Germany, Nov 8 (Reuters) - Germany's Puma will return to its sporting roots to restore growth tothe struggling brand whose profits crashed 70 percent last year,the group's new chief executive said.

Puma ranks a distant third in the sports apparel industrybehind Nike and Adidas and CEO BjoernGulden's turnaround plan breaks with the company's efforts overtwo decades under former chief Jochen Zeitz to strike a chordwith fashion-led consumers.

"We are a sports company, not a sports lifestyle company,"Bjoern Gulden told journalists, speaking in public for the firsttime since taking the helm in July.

Gulden wants Puma, which is 84 percent owned by Frenchluxury group Kering, to go back to its roots infootball and athletics, sports he thinks it has neglected.

Puma has been overtaken in the running market by rivalsNike, Adidas and a host of smaller specialists like Asics, Brooks, Saucony and Mizuno, despite its sponsorship ofsprinter Usain Bolt.

"They had all the resources to build on the brandrecognition, the Bolt endorsement. They could have become aleader in this category and they've failed to do it,"Euromonitor analyst Magdalena Kondej said.

On Friday, Puma warned 2013 net profit will fall far below2012's 70 million euros ($94 million), as it books 130 millioneuros of costs to close a development centre in Vietnam andbring product staff from London to group headquarters in thesmall German town of Herzogenaurach.

The group, which also said third-quarter operating earningsbefore special items fell 19 percent to 80 million euros, hadpreviously expected a rise in 2013 net earnings.

ACHILLES' HEEL

One of Gulden's priorities is to fix the group's footwearsales, which fell 7.5 percent in the first nine months of theyear and which he described as Puma's "Achilles' heel".

Norwegian-born Gulden, poached by Kering from Danishjewellery company Pandora, said spending would nowconcentrate on technical products, and that the group woulddelve into its archives of performance shoes to serve thefashion side.

He also said Puma had failed to make the most of big names -current sponsor deals include Bolt, soccer player Falcao andgolfer Ricky Fowler - and that the group would spend more onmedia campaigns to make sure consumers were aware of Puma.

But taking on the might of Nike and Adidas, which haveannual sales of $25 billion and $20 billion against Puma's $4billion - will not be easy, and there is increasing competitionfrom newer brands like Lululemon and Under Armour.

"Increasing the weighting in the performance field willrequire a lot of investment and that will hurt margins. It couldtake 30-40 basis points off margins each year for severalyears," Berenberg Bank analyst John Guy told Reuters.

"Gulden did a great job fixing the distribution issues atPandora, but this is a much tougher ask."

Gulden, a 48-year old former professional soccer player,said the turnaround would take some time but he was confident hecould make the brand shine again.

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