2016 was a year of major sporting events for PUMA. The Copa América, the European Football Championship and the Rio Olympics proved to be great platforms to present PUMA as an innovative and design-oriented sports brand and set the stage for our „Forever Faster“ mission statement. The increasing sell-through of our products and the growing interest of consumers in our brand underlines the fact that we have significantly improved our product offering and have made great strides in further strengthening our brand heat. This can also be seen in the positive reactions of our retail partners, with whom we worked intensively again in 2016 to position our brand and products even better in retail and wholesale. Our new product lines such as Fierce, Platform, IGNITE Dual and the FENTY collections designed by Rihanna have received a very positive response from our consumers. Coupled with a successful marketing with our brand ambassadors such as Rihanna, Kylie Jenner and Cara Delevingne, and, not least, the outstanding achievements of Usain Bolt, PUMA managed to make 2016 a year in which the company has gained further positive momentum.
In our Teamsport category, the 2016 European Football Championship in France provided the perfect stage for PUMA to show its strength as an innovative and design-oriented sports brand. With a brand presence in almost 40 percent of all games, PUMA‘s five teams were highly visible in their jerseys with ACTV Thermo-R technology. France‘s Antoine Griezmann, who was named Player of the Tournament by UEFA, was the top goal scorer of the tournament, with six goals in his two-toned PUMA Tricks shoes. Prior to the European Championship, underdog Leicester City became the first PUMA team to become English Premier League champions, followed by London-based PUMA team Arsenal, which ended the season in second place.
Our Running and Training category drew benefit from the enormous success achieved by our athletes and partnered associations at the Summer Olympics in Rio. PUMA sprint star Usain Bolt won gold medals in all three sprint competitions. In total, our PUMA-sponsored Olympic teams from Jamaica, the Bahamas, Cuba and Grenada, as well as the track-and-field teams from Switzerland, the Dominican Republic and Barbados won ten gold, five silver, and nine bronze medals. Another highlight in our Running category was the successful expansion of our IGNITE shoe technology in various models.
In our Motorsport category, Nico Rosberg won the Formula 1 world championship for the first time in his career after a gripping final race. The Formula 1 racing team MERCEDES AMG PETRONAS, which we sponsor, also won the Constructors‘ Championship for the third time in a row. Our Golf division again benefited from the excellent performance of our numerous top players, including Rickie Fowler and Lexi Thompson. The introduction of PUMA’s new KING F7 drivers with ultralight GPS sensors in the grip is revolutionizing the game of golf and making it possible for players to carry out a comprehensive analysis of their golf game on their smartphone.
In line with our mantra „The future is female“, we further sharpened our strategic focus on the female target group in 2016. A key element in this strategy is our partnership with Rihanna as brand ambassador and creative director. With her intuitive, individual style, she has a direct influence on our women‘s collections in our Performance and Sportstyle categories. September 2016 saw the launch of the first PUMA collection under her FENTY label that was first revealed at the New York Fashion Week in February. A short time later, Rihanna presented her 2017 spring/summer collection at Paris Fashion Week. This second collection is inspired by the France of the 18th century and combines influences from the time of Louis XVI with a modern street-style look.
Our “DO YOU” communication platform has further strengthened our women’s segment. Our aim with this campaign, which is centered around model, actress, and activist Cara Delevingne, is to inspire self-confidence in women around the world. A cross-collection range of products from the Running and Training segments and from our Sportstyle collection will be advertised as part of the “DO YOU” campaign.
In order to improve the quality of our sales and to increase sales, we continued to work systematically to strengthen our relationships with our strategic retail partners. In addition, we have established new initiatives and customer relationships with major retail companies in traditional and growing markets. In 2016, for example, we successfully continued our long-term relationship with Foot Locker in North America and the jointly developed retail concept „PUMA Lab“. In China, our partners opened around 200 additional PUMA retail stores during the past financial year. In terms of the Group‘s own retail stores, we continued the global roll-out of our „Forever Faster“ store concept to optimize the presentation of our products and associated technologies and strengthen our positioning as a sports brand.
We also made further progress in our ongoing efforts to simplify our organizational structure and setup in the last financial year. For example, the flexibility of the supply chain has improved as a result of increased local sourcing („local-for-local“). In addition, our own employees were moved closer to the production sites of our suppliers in order to make faster decisions and to make better use of synergies with our suppliers. Regarding the optimization of our IT, we continued to work on implementing a standardized ERP system. We also focused on renewing our IT infrastructure and improving our design, product development and planning processes. In the past financial year, we also started the process of expanding our Group headquarters in Herzogenaurach. The new administration building, which is scheduled to be completed in spring 2018, is being erected opposite the existing PUMAVision Headquarters and represents a clear commitment to the Herzogenaurach site.
The positive business development in 2016, with significantly improved sales of our products – both in the Group‘s own retail business, as well as with our partners and major customers in wholesale – shows that our efforts are already beginning to pay off in the form of better products, better marketing and better cooperation with our retail partners. This means we made major progress towards our goal of being the „Fastest Sports Brand in the World“ in 2016.
The growth in PUMA‘s sales during 2016 shows that we are on the right path with respect to increasing our brand awareness and improving our product offering. The footwear segment was the strongest driver of growth among the three product segments and has recorded an increase in sales in each of the past ten quarters. Accordingly, consolidated sales increased by 10.2% on a currency-adjusted basis during the past financial year. This put the currency-adjusted sales improvement in the high single-digit percentage range, which was even slightly higher than forecast in the previous annual report for 2016. In the reporting currency, the euro, this represents a 7.1% increase in sales from around € 3.4 billion in the previous year to around € 3.6 billion in 2016. The gross profit margin improved by 20 basis points to 45.7%, despite the strength of the US dollar against a number of currencies, as PUMA more than compensated for negative currency effects through selective price adjustments and improvements in sourcing. In addition, the increased share of sales generated by the Group‘s own retail activities had a positive impact on the gross profit margin.
The moderate increase in other operating income and expenses by only 5.7% contributed to a strong improvement in operating income (EBIT), which rose by 32.6% from € 96.3 million to € 127.6 million in the past financial year. The gross profit margin, other operating income and expenses and operating income were thus also within the range of the forecast or slightly higher. Consolidated net earnings increased to €62.4 million (previous year: € 37.1 million) and earnings per share rose to € 4.17 compared to € 2.48 in the previous year.
Due to the successful business development, with a clear improvement in the earnings situation and the free cash flow, the Managing Directors will propose to the Administrative Board and the Annual General Meeting on April 12, 2017, the distribution of a dividend of € 0.75 per share for the 2016 financial year (previous year: € 0.50).
At the end of the year, the PUMA share listed at € 249.65, a 25.7% increase over the share price at the end of the previous year (€ 198.65). This means that the market capitalization has risen to around € 3.7 billion (previous year: € 3.0 billion).