About 450 jobs are to be cut at Puma as part of the company's wide-ranging restructuring plans, which will cost €25 million more than budgeted. This amounts to about 4 percent of the group's staff, which reached a level of 11,290 people at the end of last year.
Franz Koch, the company's departing chief executive, added that about 90 of the company's least profitable stores would be shut down by the end of this year, out of 590 stores at the end of 2012. However, Puma should still end this year with about 540 stores, due to store openings in emerging markets.
Puma has already publicized some of the highlights of its restructuring plan in the last months. Among other measures, it bundled the management of 23 European countries into the hands of seven area managers, as detailed in SGI Europe earlier this year. It implemented the group's supply chain organization at regional level, and it will shutter two more warehouses in Europe this year, to align with this regional structure. ERP systems are to be harmonized at international level.
At the same time, the company started to cut back on the number of products on offer, which are to be reduced by about 30 percent in the next three years. Koch said a reduction of 14 percent would be achieved this year, then another 10 percent would be cut in 2014 and at least another 6 percent the next year.
The brand is pulling out of several product categories altogether. Koch said that Puma would no longer be involved in sailing from next year, to focus on outdoor products instead in the U.S. market. Puma has also decided to exit the rugby category in Europe, which will entail the termination of its partnership with the Irish Rugby Football Union beyond the 2013-14 season.
Instead, Koch said that Puma will concentrate on four global pillars: team sports; running, training and fitness; lifestyle; and motorsports. Golf is another category that will be in focus but only in a few markets, which together make up nearly all of the international golf market.
Puma has already started to more clearly separate the performance and lifestyle units in its organization and started operating with a business unit model from the start of this year – working on sports categories encompassing all product groups (instead of splitting footwear, apparel and accessories). Koch described the rise of Cobra Puma Golf as a convincing example of this approach. Marketing is also meant to put more emphasis on products.
The company's increased focus on performance products became apparent just a few days before Koch's presentation with the launch of Puma's Nature of Performance, a cross-category brand platform, in New York. As described in our previous issue, this particularly featured the launch of the Puma Mobium Elite running footwear.
Puma has terminated some endorsement deals to have increased resources for other agreements that are more strongly aligned with its category focus and its plans to rejuvenate the brand. Koch referred to endorsees such as Marcus Reus from Borussia Dortmund in football and Ricky Fowler in golf, as well as Professor Green, a popular British rapper.
The presentation of the results and the details of the restructuring amounted to a farewell for Koch himself. It was announced in December that he would be leaving the company at the end of March – the most prominent among a spate of executives to depart from the company. Koch's successor has yet to be appointed, but he said that his duties would be taken over in the interim by Stefano Caroti, chief commercial officer, along with Michael Lämmermann, chief financial officer since the start of this year, and supported by Jean-François Palus, head of Puma's administrative board.
Numerous reports circulated yesterday to the effect that Puma's parent company, PPR, has already settled Koch's succession by appointing Bjørn Gulden as Puma's new CEO, but they have been denied. A spokesman for PPR said that no contract had been signed and Gulden himself told financial analysts watching this morning the presentation of Pandora's excellent financial that he was “proudly” staying in his post. Gulden, a former executive of Adidas and a former football player in the FC Nürnberg team, spent ten years in the top management of Deichmann before he became CEO of Pandora, a big Danish-based jewelry company, in March 2012.
Koch is exiting the company after less than two years at the helm, but he emphasized in his last conference call at Puma that he was leaving with his head held high. He prided himself on providing the impetus for the company's restructuring plans and mapping out the strategic investments to be made to rejuvenate the brand.
While he studiously avoided any bitter remarks in his prepared comments, Koch did compare his exit to a “foul” when asked. He indicated that he was not given enough time to implement the required changes at Puma. However, the former top-league field hockey player quickly added that, when tackled, he had learned to rapidly get up and resume his game.
