Puma will close a third of its stores
January 17, 2010
The time is the economy in sports equipment. Reportedly, the German Puma, number three in the sector, plans to close one third of its stores worldwide. A third of what? Mystery, for refusing the mark "for competitive reasons" to disclose the number of its outlets. In France, the measure could be even more severe. According Fashion Daily News, half of the twelve shops would be closed (five of them to be taken over by the U.S. jeaneur Guess, expanding). "We are assessing the situation of our shops around the world, including France's point of view of their location, their turnover and profitability. This process is not completed and only the outcome that we will decide, merely commenting on a spokeswoman for Puma. The company plans to dispose of its outlets worst performers, some of which lose money.Several have already been closed in Germany.
70% subsidiary of PPR, controlled by the Pinault family, Puma has launched a comprehensive plan savings of 150 million euros in 2011. The situation now deteriorated from the last quarter of 2008. If it had concluded the year with a record turnover of 2.5 billion euros, it has faced since a decline in sales and a drop in profits. The turnover in 2009 will be announced in February may have declined by around 5%.
World Cup effect
The target of 4 billion euros in turnover this year has been officially abandoned by management. Meanwhile, the brand, which proved a cash machine for PPR, has seen its profits plunge last year (minus 22% in the third quarter 2009).
The entire sports sector went through a difficult year.The U.S. leader Nike has announced a decline in activity of 4% and the number two Adidas foresees a decline of between 1 and 5% for 2009. Like Puma, Nike and Adidas have launched major restructuring program to restore their margins.
Besides the slowdown in consumption in most Western countries, the sports brands have managed in the past year the difficult aftermath of the Beijing Olympics. Over-invested in 2008, the Chinese market was left with large inventories of slow-moving. Russia has also been strongly affected by the crisis. Unlike other sectors, such as luxury, emerging countries have not taken over. 2010 should be the year of the rebound, thanks to World Cup football in South Africa, which put many Jochen Zeitz, Puma's boss.The brand is also investing in a new store concept tested in Berlin and London, which seems to give good results. Puma has not abandoned its strategy of increasing its turnover in its own stores (now 17% of sales). Meanwhile, PPR aid to clean up the park.
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