Star Effect Stimulates Performance Rise, Puma Hard To Rely On Rihanna Evergreen

Star effect, performance star effect and marketing input can bring immediate stimulation to brand performance, but may not become core competitiveness.

The German sports brand Puma (PUM.ETR), which is turned over by Rihanna, is the most direct beneficiary of the star effect.

In 2007, Kai Yun group, which intends to enter the lifestyle field, acquired Puma, but failed to generate effective returns to shareholders, resulting in a few rounds of Puma being sold by Kai Yun group.

However, since Rihanna joined Puma in 2014 to become a brand creative director and launched Fenty x Puma by Rihanna, brand popularity has rapidly bottomed out.

All the business related to Rihanna can break the record of performance, behind which is its huge social media influence. At present, there are more than 64 million fans in instagram alone.

The Creeper shoes she initially launched for Puma sold out for three hours.

At the end of 2015

Sales began to pick up and sales grew at a record high.

Global campaign launched by Wedbush, a US brokerage firm

In the research report, Puma successfully squeezed the US sports brand Under Armour, which is the third place in the world. At present, Puma has a global market share of about 5%.

From classic

Starting with Creeper, Rihanna takes the trend of sports shoes to bring Puma back to the vision of young people, and then fashion the fashion series, fashion releases in fashion week of New York and Paris, bring the brand to the new fashion field, and firmly capture the young female consumers who have not paid enough attention to and are not attracted by professional sports brands.

In the third quarter of last year, Puma women's clothing business increased more than other businesses.

Puma did not disclose the terms of the Rihanna contract, but in September last year, Puma signed a Selena Gomez with 120 million fans on Instagram.

The post-90s female singer not only shot advertisements for Puma, but also collaborated with brands to design new products.

Some analysts speculate that after the expiration of the Rihanna contract, it is likely not to renew the contract. In order to reduce the impact on the brand image after the completion of the Rihanna contract, Puma is making a pition to the new brand ambassador Selena Gomez from various publicity channels.

On the other hand, the huge cost of celebrity endorsers and marketing investment needs higher gross margin support.

Despite the double-digit growth in Puma sales after Rihanna's holdings, the net loss was recorded in the fourth quarter of 2016, because profits were offset by high investment in marketing.

This means that brands need not only pay attention to the short-term promotion of marketing, but also have to consider the issue of return on investment.

Puma knows that brands can not rely on Rihanna to get evergreen. On the one hand, they should look for the next "Rihanna". On the one hand, they should seek new growth points outside the female market.

As a result, Puma is at a turning point after the 9 quarter double-digit growth in the second quarter of this year.

According to the first half of last year's earnings report released by Puma on Thursday, group sales increased by 15% to 1 billion 49 million euros in the second quarter ended June 30th, and achieved double-digit growth in all regions and product sectors, gross margins rose to 48.6%, operating profits rose 33% to 58 million euros, but slightly lower than analysts' expectations.

In the first half of this year, Puma sales surged 18% to 2 billion 180 million euros, and net profit increased 37.7% to 98 million 500 thousand euros.

The picture shows the main performance data of Puma in the second quarter and the first half of the year.

Whether from the most powerful Asia Pacific region or the category of products, the growth rate of Puma slowed down overall. In the 34.8% quarter of last quarter, the Asia Pacific region increased by only 11.8% in the second quarter, and the highest growth rate of each category was not more than 20%. After the announcement of the earnings report, the company's share price fell by 8.3% on that day.

This also means that the star effect is coming to an end for the Puma's lifting cycle.

Although Puma will immediately lead to Selena Gomez and supermodel Cara Delevingne, the sensational effect created by Rihanna can not be repeated.

More importantly, the star effect is easy to copy. Now sports brands are beginning to bow to celebrities. Compared with brands such as Reebok, who signed the singer Ariana Grande, Puma does not occupy an obvious advantage.

In addition, once the star's commercial value is proved, it will naturally cause competition among the giants.

Rihanna and LVMH signed the Fenty Beauty beauty makeup brand. Not long ago, they launched the underwear brand Savage x Fenty with fashion group TechStyle. Its early influence on Puma has been diluted.

After the short-term boost of the star effect, Puma faces more difficult challenges.

First of all, the core product sports shoes market has undergone drastic changes.

Bj RN Gulden, chief executive of Puma, said that in the first half of this year, sports market trends and consumer demand had changed significantly, especially footwear products, but the rapid reaction rate of Puma is expected to drive the group to continue to grow.

Over the past two years, with the spread of the retro trend in the sports market, Puma's Clyde, Adidas's Stan Smith and Super Star have won the favor of consumers.

But in the first half of this year, minimalist sneakers quickly cooled.

Because of the popularity of luxury brands and the popularity of "heavy" style sports shoes, Balenciaga Triple S, Louis Vuitton and other luxury sports shoes have captured a group of young consumers who are sensitive to the trend.

In response to changes in the trend of sports shoes, Puma also launched the "bulky" sports shoes Thunder Spectra in May.

However, compared with the more gimmick luxury brand sneakers, this kind of sneakers lack recognition in the crowded sports shoes market, and have not caused waves in the market.

In addition, Puma was officially divest in the first half of this year and became more independent in management structure.

Although Puma's performance has improved, Kai Yun group has already identified Puma as a non strategic asset.

In January of this year, Kai Yun group announced that it had allocated 70% of its Puma shares to shareholders, of which Art MIS will become a long-term strategic shareholder holding Puma 29% shares.

In order to focus on luxury business, Kai Yun group has also stripped Stella McCartney and other three brands in the past two months.

Puma, which is directly managed by the luxury group, seems to have more clearly defined the line of professional sports brand, and the most important strategic decision of the group is to return to the basketball market.

Last month, Puma announced that rap singer Jay-Z was the creative director of basketball and President of Puma Hoops, responsible for product design and creative guidance, which meant that basketball shoes began to return to professional basketball shoes after 17 years.

Some analysts believe that Puma's choice of Jay-Z as basketball creative director is aimed at creating the success of Rihanna again, and Rihanna also starts with sports shoes.

In order to launch the basketball series in October this year, Puma has invested a lot of marketing budgets, and the cost of early cost has not yet paid off for the brand.

The marketing preheating for the return to the basketball market also includes Puma and basketball veteran Walter Frazier signing lifelong contracts.

In fact, Walter Frazier and Puma have a deep origin, and with the star effect at that time, it has become a part of Puma brand spirit.

As early as 1973, Walter Frazier and Puma jointly launched the brand classics.

"Clyde" made this sneaker red.

At the moment, from the star effect to mining the brand story, Puma seems to be looking back at the brand itself, aiming to consolidate the core competitiveness of the brand.

At the same time, Puma inevitably enters the classic business of sports brand, that is, signing sponsorship contracts with professional athletes, and the operation mode of this business is too mature, and competition is fierce.

In May of this year, news came out that Puma was planning to return to basketball shoes by signing basketball star Torey Jan.

However, in June, Teri Yang signed a multi-year contract with Adidas, which was rumored to have been quoted higher by Adidas.

But Puma's determination can not be underestimated, signing the Duke University's forward Marvin Bagley III, University of Arizona's Deandre Ayton and other basketball stars.

Betting basketball Nova shows Puma's basketball shoes.

Patience, after all, is still firmly held by Nike in higher priced basketball players.

Although sports brand fashion is becoming an irreversible trend, no brand can jump out of the framework of traditional sports business.

In addition to basketball shoe business, Puma continues to consolidate its position in track and field, comprehensive training and football.

A day after the earnings announcement, Puma announced the signing of WNBA as an official sponsor. This is the first time Puma has signed the professional sports league.

In the past Russia world cup, Puma sponsored Italy and African teams went out in advance, but the other two teams sponsored by Uruguay and Switzerland entered the top 8 and 16 respectively, to a certain extent, for the brand sponsorship.

Similarly, Adidas, which relies on marketing strategy and revival of revival, is facing a similar situation. With the backlash of Nike, today's market situation is more complicated.

Wells Fargo has recently lowered its Adidas rating from the broader market to the broader market, on the grounds that competition in the main price range of sports shoes will damage the company's profits and revenues.

Analyst Tom Nikic believes that Nike's innovation and the rise of Vans have made competition in the field of sports more intense, or putting pressure on Adidas.

At present, Vans is a popular brand in the price range of 60 to 100 dollars, after which the preferred brand of the price is Adidas which is turned red by Superstar and Stan Smith.

In addition, consumers' response to the new adidas has also led to a decline in investor confidence in the brand.

According to fashion headline data, the adidas Group's revenue grew by 10% to 5 billion 590 million euros in the fiscal year ended March 31st, compared with the 18.9% growth rate in the first quarter of 2017. Obviously, sales of Adidas also began to slow down.

In the past three months, the group's stock price has fallen by about 8.8%.

Even in marketing, Adidas does not take the absolute advantage.

Germany's early exit this year has had a negative impact on Adidas, and the flagship Tmall flagship store has launched 5 promotions of the German team's home jerseys.

According to Thomson Reuters and StyleSage Co., the sales of the world cup retailers, brands and products found that the sale rate of Nike World Cup products was 28% in 7 days, much higher than 6% of Adidas, and the price of Nike Jersey was 1099 yuan, two times the average price of Adidas 599 yuan.

Another analysis pointed out that although adidas has greatly enhanced its brand awareness in various ways such as sponsoring the world cup and carrying out joint cooperation in recent years, Nike still has the main advantage in contributing to the main price range of most sales.

In the three consecutive quarter of the loss of the North American market, Nike ultimately rely on continuous innovation products to pull back a game.

In the fourth quarter of last year, it resumed growth in North America and recorded an increase of 3% to 3 billion 875 million US dollars.

In the fiscal year ending May 31st, Nike sales increased by 6% to $36 billion 400 million, and gross margins were down to 43.8% from 44.6% in the previous year.

According to data released earlier by EDITED, the core products of Nike are priced at US $28 to US $84, with an average price of US $62.33, while Adidas core products are priced at US $28 to US $70, with an average price of US $56.6.

Take a pair of 100 dollars sports shoes as an example. If the cost of the brand is split into factory cost, retailer profit and so on, Adidas will earn 2 dollars for every pair of shoes and 100 dollars for Nike, and 5 dollars for it.

After analyzing nearly 60 sports retailers around the world, EDITED concluded that the average discount rate of Nike is 20.7%, which is lower than 21.6% of Adidas, which means that whether Adidas is weak in terms of pricing or profit, Nike will increase the innovation of products in the main price range or increase the gap between the two.

This also provides a precondition for Nike to have more budget space to invest in marketing, especially to consolidate its advantages in professional player sponsorship contracts.

Puma is well versed in the fierce competition in the sports market. The early Star Marketing helped Puma narrow the gap with the head brand, but only by strengthening the core competitiveness of the brand can we help the brand stabilize the position of the third sports brands.

Bj? RN Gulden said that despite the changing trend of products, currency fluctuations and difficulties in the global trade environment, the business environment is uncertain, but the Group expects the EUR profit target to be between 310 million euros and 330 million euros per year, an increase of about 30%.

Earlier, the group had raised its sales target by 2% to 12% to 14%, releasing optimistic signals.

Today, Kai Yun group divestiture Puma in a decentralized way. Some analysts believe that it is intended to enhance the value of its shares and not give up attracting potential buyers.

The potential buyer of Anta sports (2020.HK), which has been released earlier, has a market value of more than HK $100 billion, and the possibility of acquiring Puma is still possible.

Since this year, the stock price of Puma (PUM.ETR) has risen more than 19%, and the share price of Puma has almost doubled in two years.

As of press release, Puma's share price was 425 euros, and its market value was about 6 billion 700 million euros.