To our shareholders

LETTER FROM CEO BJØRN GULDEN

Dear Shareholders of PUMA,

2016 was an exciting year for us with many great sporting events to showcase our brand and with a general improvement in our business. We had growth in all regions and in all product segments. Most importantly, we saw an improved sell-through of our products to the end consumer, both in our owned and operated retail and with our key retail partners. This resulted in increased profitability and a substantially improved cash flow for our company. We therefore feel assured that we are on a good path with the “right” strategy, with better products, more successful and salesdriven marketing and that we have clearly enhanced the cooperation with our retail partners.

We still have a lot to improve, but we felt we got some “Momentum” in 2016 and I can assure you that we will work very hard to continue this in 2017. We will continue to pursue our mission to become the Fastest Sports Brand in the World.

In 2016, we again focused on our five strategic priorities and made progress in all of them: improving the brand heat for PUMA, further improving our product engine with a strong pipeline of exciting, innovative and commercial products, optimising the distribution quality through stronger cooperation with our key retail partners, increasing the speed in our organisation and business processes and strengthening the focus on our women´s business.

For us, 2016 was particularly exciting because of big events such as the Copa América, the UEFA Euro 2016, and the Olympics in Rio – all of which proved to be perfect stages to showcase PUMA as an innovative and design-driven sports brand. In addition, we managed to better capitalise on our partnerships with some of the world´s best ambassadors. The Fastest Man on Earth, Usain Bolt, star footballer Antoine Griezmann, golf icons Rickie Fowler and Lexi Thompson, Arsenal Football Club, BVB Borussia Dortmund, the New York City Ballet, Rihanna, The Weeknd, Cara Delevingne, Kylie Jenner and many others made a major impact in creating more brand heat and improving the sales of PUMA products in 2016.

The grown demand for both our Performance and Sportstyle products confirms that we have managed to increase the commercial appeal of our products. The PUMA Fierce has been a success in terms of shelf space, media coverage and most importantly sales. Our IGNITE franchise has put PUMA back in the running and training category again and the FENTY PUMA by Rihanna products have had a tremendous impact on our success in the fashion/lifestyle area. Furthermore, our women´s business saw the launch of a series of successful styles: shoes, apparel and accessories – both in collaboration with Rihanna as well as in our inline collection. Key footwear styles sold out within weeks or days. Our task is now to utilise this momentum to get more and even better shelf space with the best retailers around the world.
In terms of improving the quality of our distribution, we continued to see a strengthened cooperation with our key retail partners. Because of the enhanced brand heat and the improved sell-through of our products, we experienced increased interest from retailers from all over the world. This resulted in more and better shelf space with existing retailers, and also new shelf space with retailers that have not ranged PUMA lately. PUMA’s owned and operated retail also developed positively in 2016 with a healthy like-for-like sales growth, a higher number of owned and operated stores and significant growth in the eCommerce business.

We have continued to make progress in key areas to improve our business processes and to increase the speed in our organisation. This includes further standardisation of ERP systems, the implementation of a standardised global IT-foundation and the continued optimisation of the global sourcing and trading organisation. We have developed and implemented new tools to speed up the product creation process and to shorten the lead times for our products.

We are very proud of the positive development in our women´s business in 2016. The product launches with Rihanna and other female ambassadors have been very successful throughout the whole year. The FENTY PUMA by Rihanna collections have been very well received by the consumers and mostly sold out within hours. The most successful FENTY PUMA by Rihanna shoe model, The Creeper, which was launched in several colour and material executions was named the  “Shoe of the Year 2016” by Footwear News in the US. The reactions to the FENTY PUMA by Rihanna runway shows during the New York and Paris Fashion Weeks have been overwhelmingly positive and created major buzz in social media. During 2016, we also launched our “DO YOU” campaign, which aims to inspire confidence in women around the world. Spearheaded by international model, actress and activist Cara Delevingne, “DO YOU” features a cross category product range from PUMA´s Running, Training and Sportstyle collections.

PUMA remains committed to the United Nations Global Compact and its ten principles. Social, economic and environmental sustainability is a core value for PUMA and we will continue to pursue our ten ambitious sustainability targets that we aim to reach by 2020. In April 2016, PUMA and the International Finance Corporation (IFC), a member of the World Bank Group, entered into a partnership to provide financing to PUMA’s suppliers in emerging markets. This innovative programme, which is the first a European brand signed with IFC, offers financial incentives for suppliers to improve environmental, health, safety and social standards. In its first phase, the programme will be rolled out in Bangladesh, Cambodia, China, Indonesia, Pakistan and Vietnam.  As part of our community engagement, we also formed a partnership with “Right To Play”, an organisation engaged in the support of underprivileged children through sports.

Like a successful sports team, we count on every player here at PUMA. The more we believe in ourselves, the more we trust and motivate each other, the better will be the result. I would like to express my sincerest thanks to each and every team member here at PUMA. You have all done a great job in helping us to improve our business in 2016, and your personal commitment, energy and positive attitude are highly appreciated. I would also like to thank you, our shareholders, for their belief and support. I can assure you that we will work very hard to use the current “Momentum” to improve the value of your investment. We are confident that 2017 will be a year where we will continue to improve our performance and a year where we will take another step in the journey to become the “Fastest Sports Brand in The World”!

Yours sincerely,

Yours,

BJØRN GULDEN