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    7936   JP3118000003

ASICS CORPORATION

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New Puma CEO seeks to return company to sporting roots

11/08/2013 | 09:08am EST
Puma shoes seen in entrance hall of German sports goods firm Puma before shareholders' meeting in Herzogenaurach

HERZOGENAURACH, Germany (Reuters) - Germany's Puma (>> Puma AG Rudolf Dassler Sport) will return to its sporting roots to restore growth to the struggling brand whose profits crashed 70 percent last year, the group's new chief executive said.

HERZOGENAURACH, Germany (Reuters) - Germany's Puma (>> Puma AG Rudolf Dassler Sport) will return to its sporting roots to restore growth to the struggling brand whose profits crashed 70 percent last year, the group's new chief executive said.

Puma ranks a distant third in the sports apparel industry behind Nike (>> Nike Inc) and Adidas (>> adidas AG) and CEO Bjoern Gulden's turnaround plan breaks with the company's efforts over two decades under former chief Jochen Zeitz to strike a chord with fashion-led consumers.

"We are a sports company, not a sports lifestyle company," Bjoern Gulden told journalists, speaking in public for the first time since taking the helm in July.

Gulden wants Puma, which is 84 percent owned by French luxury group Kering (>> KERING), to go back to its roots in football and athletics, sports he thinks it has neglected.

Puma has been overtaken in the running market by rivals Nike, Adidas and a host of smaller specialists like Asics (>> ASICS Corporation), Brooks, Saucony and Mizuno, despite its sponsorship of sprinter Usain Bolt.

"They had all the resources to build on the brand recognition, the Bolt endorsement. They could have become a leader in this category and they've failed to do it," Euromonitor analyst Magdalena Kondej said.

On Friday, Puma warned 2013 net profit will fall far below 2012's 70 million euros ($94 million), as it books 130 million euros of costs to close a development centre in Vietnam and bring product staff from London to group headquarters in the small German town of Herzogenaurach.

The group, which also said third-quarter operating earnings before special items fell 19 percent to 80 million euros, had previously expected a rise in 2013 net earnings.

ACHILLES' HEEL

One of Gulden's priorities is to fix the group's footwear sales, which fell 7.5 percent in the first nine months of the year and which he described as Puma's "Achilles' heel".

Norwegian-born Gulden, poached by Kering from Danish jewellery company Pandora (>> PANDORA A/S), said spending would now concentrate on technical products, and that the group would delve into its archives of performance shoes to serve the fashion side.

He also said Puma had failed to make the most of big names - current sponsor deals include Bolt, footballer Falcao and golfer Ricky Fowler - and that the group would spend more on media campaigns to make sure consumers were aware of Puma.

But taking on the might of Nike and Adidas, which have annual sales of $25 billion and $20 billion against Puma's $4 billion - will not be easy, and there is increasing competition from newer brands like Lululemon (>> Lululemon Athletica inc.) and Under Armour (>> Under Armour Inc).

"Increasing the weighting in the performance field will require a lot of investment and that will hurt margins. It could take 30-40 basis points off margins each year for several years," Berenberg Bank analyst John Guy told Reuters.

"Gulden did a great job fixing the distribution issues at Pandora, but this is a much tougher ask."

Gulden, a 48-year old former professional footballer, said the turnaround would take some time but he was confident he could make the brand shine again.

(Additional reporting by Joern Poltz; Editing by Mark Potter and Elaine Hardcastle)

By Victoria Bryan


ę Reuters 2013
Stocks mentioned in the article
ChangeLast1st jan.
ADIDAS AG -5.45% 253.35 Delayed Quote.-14.95%
ASICS CORPORATION -2.60% 2956 End-of-day quote.49.29%
KERING -7.39% 665.5 Real-time Quote.11.96%
NIKE, INC. -2.33% 168.02 Delayed Quote.18.77%
PANDORA A/S -5.25% 830 Delayed Quote.21.88%
PUMA SE -4.37% 103.95 Delayed Quote.12.65%
RISE, INC. 0.00% 24 End-of-day quote.0.00%
UNDER ARMOUR, INC. -3.69% 23.98 Delayed Quote.45.02%
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Analyst Recommendations on ASICS CORPORATION
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Financials
Sales 2021 396 B 3 498 M 3 498 M
Net income 2021 5 620 M 49,6 M 49,6 M
Net cash 2021 6 177 M 54,5 M 54,5 M
P/E ratio 2021 96,2x
Yield 2021 0,81%
Capitalization 541 B 4 773 M 4 775 M
EV / Sales 2021 1,35x
EV / Sales 2022 1,23x
Nbr of Employees 8 904
Free-Float 92,2%
Chart ASICS CORPORATION
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ASICS Corporation Technical Analysis Chart | 7936 | JP3118000003 | MarketScreener
Technical analysis trends ASICS CORPORATION
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Mean consensus OUTPERFORM
Number of Analysts 6
Last Close Price 2 956,00 JPY
Average target price 3 420,00 JPY
Spread / Average Target 15,7%
EPS Revisions
Managers and Directors
Motoi Oyama Chairman & Chief Executive Officer
Yasuhito Hirota President, COO & Representative Director
Koji Hayashi Senior Manager-Finance & Accounting
Hitoshi Kashiwaki Independent Outside Director
Kazuo Sumi Independent Outside Director
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