Munich The sporting goods company Puma wants to double its sales in the long run in competition with its big competitors Nike and Adidas. “In any case, Puma has the potential to generate sales of more than ten billion euros. Then we’ll see, ”said CEO Björn Gulden in an interview with Handelsblatt.
Business at the world’s number three is also currently going well. “We are getting through the third quarter well and we have the feeling that the fourth quarter will also be good under the circumstances,” said Gulden. However, the challenges are still great. “Vietnam is closed, there is a shortage of containers, the freight rates have increased sixfold and in general the supply chain is currently difficult due to Corona.”
Puma had recorded a slight decline in sales to 5.2 billion euros in the Corona year 2020. Most recently, the Herzogenaurach Dax newcomer grew more dynamically than the competition. In terms of profit, Gulden is aiming for a double-digit operating return on sales for 2023. Last year, the margin had halved to four percent because of the corona pandemic.
Gulden rejects a boycott of the controversial World Cup in Qatar in the coming year. “I’m a sports romantic,” said the Puma boss. He believes that sport can bring people together. The situation in the country will also be illuminated by the major event. “I think a boycott is the worst thing you can do.”
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Read the full interview here:
Mr Gulden, on this day the first question: How satisfied are you with the result of the Bundestag election?
It is a pity that there is no clear winner. That complicates the whole situation and does not create the basis for clear and quick decisions.
On the other hand, there is clarity in the Dax: Puma has just been included in the leading index. Does this also increase your ambitions to catch up with Adidas and Nike?
This is recognition for the whole team, but for me the Dax was not a goal in itself. It is crucial for us that customers and dealers are satisfied. I like to fight there.
But now you are at least in a league with Adidas on the stock exchange. At the moment you are number three in the world market by a considerable margin. In many industries it is important to be among the two largest providers.
That too is not a value in itself. We used to not work as well as Nike and Adidas for years. It took a long time to correct that. But now we have the strength to become a globally successful company. We currently have good momentum and are even stronger than before Corona. There is no segment in which we are currently not growing at an above-average rate. Even if Nike is perhaps the hottest brand right now.
Why is that?
Over the years they have put together a very good package of product and marketing. But these are mainly retro shoes from the 80s, not necessarily innovations. It’s harder to keep a number one position. We’re attacking and I see enormous potential for Puma. We need to get more Puma products on the market.
Can you put a figure on the potential?
In any case, Puma has the potential to generate sales of more than ten billion euros. Then we’ll see.
That would be a doubling. What about winning?
If things normalize, our goal of a double-digit operating return on sales in 2023 should be achievable.
Factory closures in Vietnam are causing problems
You originally announced this in 2018 in the medium-term planning for 2022.
No, we said in 2018 that we want to achieve ten percent EBIT in 2022/23. Now let’s say 2023, but we don’t yet know how the supply chains will continue. Many sit in Germany and think that Covid is over. But we’ve just closed half of our factories in Vietnam. This is the biggest lockdown we’ve had in the pandemic.
Was it too dependent on Vietnam? Are you going to change the production structure?
No, our strategy is to have a third of the manufacturing facilities in China, a third in Vietnam and a third in the rest of the world. That is a very good result.
How is business currently?
The situation is actually difficult: Vietnam is closed, there is a shortage of containers, freight rates have increased sixfold and in general the supply chain is currently difficult due to Corona. But the demand is high. We are getting through the third quarter well and we have the feeling that under the circumstances, the fourth quarter will be good too.
How is the situation in China? The industry has suffered from the boycott of Western brands.
The market has still not recovered. We cannot do a lot of marketing activities. But I am convinced that Chinese consumers will do more sports and buy Western brands in the next few years.
Puma is the supplier of the new European champions.
(Photo: AP)
The big topic in the industry right now is sustainability. Is it possible to differentiate yourself at all if all sporting goods manufacturers say that almost all products will soon be produced sustainably?
For me it’s less about marketing and more about values. Sustainability has always been important to Puma. It just wasn’t a central issue for consumers for a long time. Thanks to Greta and others, that has changed. Now a lot of young people are asking. Sustainability is a must.
But doesn’t the sports world have a credibility problem when everything revolves around money and, for example, the soccer World Cup is awarded to Qatar?
I already know what you’re getting at. But I think boycott is the worst thing you can do.
Why?
I am a sports romantic. I believe that sport, like music, can bring people together. In has been traveling all over the world for the past 30 years. In many countries the situation has improved a lot during this time. Maybe sport contributed a small part to that. And when the World Cup is in Qatar now, you too will drive journalists there and shed light on the situation.
“Of course Dortmund can become champions”
And as a sports fanatic, don’t your heart bleed when you see oligarchs or state-owned companies buy soccer teams that then win everything?
As always in life, it is a matter of supply and demand. As long as the fan goes along with it, I don’t know how to change it artificially. Such is the free economy. But it is important that there is transparency.
But the situation is cemented. Or do you think that Borussia Dortmund can become champions instead of the all-powerful FC Bayern – you are on the supervisory board.
Of course, Dortmund can become champions. Money helps, but money alone doesn’t win games. And you can never buy all the good players. Italy has also become European champions with many players that only a few know here. And they had the nicest jerseys.
“Money helps, but money alone does not win games.”
(Photo: imago images / Team 2)
Sure you say that. They were from Puma too. Competitors like Adidas are increasingly concentrating on a few sports. Will Puma go this way too?
I believe that today, as a global sports brand, you have to have a local understanding in order to be successful. For example, in India you have to be in cricket to play a role, in Australia in netball and Australian football. There are local sports all over the world where we as Puma invest to become relevant in the country.
Under the Puma brand? Or could you also buy locally strong brands?
I’ve never been a fan of multi-brand strategies. The sports market is so competitive that it is almost impossible to successfully manage multiple brands.
So after splitting up with Adidas, Reebok is now becoming a more dangerous competitor?
Standing alone, they at least have better chances. But it always depends on what you make of it.
Finally, the question: What is your greatest sporting desire?
First of all, I wish that we can have full stadiums again. And then of course that BVB becomes champions. If you can do that, you can win the Champions League.
Thank you very much for the interview, Mr. Gulden.
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