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Puma hopes top signings to stop sales slump in 2014

Herzogenaurach, Germany: German sportswear company Puma hopes a raft of high-profile signings will stop sales falling this year after it reported revenue tumbled a worse-than-expected 13.2 per cent in the last three months of 2013.

Puma, 84 per cent owned by French luxury group Kering , reported fourth-quarter sales of €698.3 million ($960 million), a drop of 4.7 per cent stripping out currency effects as footwear sales shrank 13 percent, missing average analyst forecasts for €718 million.

Puma ranks a distant third in the sports apparel industry behind Nike and Adidas and new CEO Bjoern Gulden is trying to return the company to its sporting roots under a turnaround plan that breaks with former chief Jochen Zeitz’s focus on sports-inspired fashion.

Puma, which last month ousted Nike as the kit supplier to English soccer club Arsenal from next season, said it expects flat net sales in 2014, with the second half expected to compensate for a shortfall in the first half.

Gulden, a former professional soccer player from Norway who took the helm last July, said the signing of Arsenal, Italian footballer Mario Balotelli and the extension of its sponsorship of sprinter Usain Bolt showed Puma was a “true sports brand.” “There is no doubt that we have issues in terms of lack of brand heat, commercial products and desirable distribution,” Gulden said in a statement.

“This is not a quick fix but 2014 marks the start of the turnaround.” The soccer World Cup and the Winter Olympics in Sochi should help sportswear sales to grow between 3.5 per cent and 4 per cent this year, the World Federation of the Sporting Goods Industry (WFSGI) predicted last month.

Puma noted that a quarter of all teams at the World Cup would be wearing its kit, including Italy, Switzerland and four teams from Africa, seen as a big growth market for the future.

As it warned in November, Puma booked €129 million of costs in the fourth quarter to close a development centre in Vietnam and bring product staff from London to group headquarters in the small German town of Herzogenaurach.

It expects its gross profit margin to improve slightly in 2014 due to sourcing improvements and a changing product mix after the figure fell to 43.2 per cent in the quarter from 44.6 per cent due to discounting and currency effects.

Puma said it would propose to keep its dividend steady at €0.50 per share.