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GRI G4 Content Index

PublicisPixelparkAdmin — Tue, 27 Feb 2018 07:26:21 +0000

GRI G4 CONTENT INDEX

Since 2003 PUMA’s sustainability reports are based on the guidelines of the Global Reporting Initiative (GRI), which developed detailed and widely recognised guidelines on sustainability reporting. This report has been developed in accordance with the GRI G4 guidelines using the “Core” option. This option enables us to report on the impacts related to our economic, environmental, social, and governance performance. It includes topics that are material to PUMA’s business and our key stakeholders and that constitute our sustainability targets. These targets have been systematically developed in accordance with the feedback from PUMA’s stakeholders.

GENERAL STANDARD DISCLOSURES

SPECIFIC STANDARD DISCLOSURES

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PUMA Group Essential Information

PublicisPixelparkAdmin — Fri, 02 Feb 2018 09:48:25 +0000

PUMA GROUP ESSENTIAL INFORMATION

COMMERCIAL ACTIVITIES AND ORGANIZATIONAL STRUCTURE

The company operates as European corporation, PUMA SE, with Group headquarters in Herzogenaurach, Germany. Our internal reporting activities are based according to three regions (EMEA, the Americas and Asia/Pacific) and three product segments (footwear, apparel and accessories). A detailed description of the various segments can be found in section 25 of the Notes to the Consolidated Financial Statements.

Our revenues are derived from the sale of products from the PUMA and COBRA Golf brands via the wholesale and retail trade, as well as from sales in our own retail and online stores. We market and distribute our products worldwide primarily via our own subsidiaries. There are distribution agreements in place with independent distributors in some countries.

As of December 31, 2017, 108 subsidiaries were controlled directly or indirectly by PUMA SE. Our subsidiaries carry out various tasks at the local level, such as sales, marketing, product development, sourcing and management. A full list of all subsidiaries and an affiliated company can be found in section 2 of the Notes to the Consolidated Financial Statements.

TARGETS AND STRATEGY

PUMA aims to become the fastest sports brand in the world. For this reason, PUMA has been executing a turnaround strategy over the past few years, which is focused on five priorities: brand heat, a competitive product range, a leading offer for women, improved distribution quality and organizational speed. Positive feedback from retail partners around the world, better sell-through as well as improved financial results in 2017 confirm that PUMA is on the right track.

PUMA’s brand draws strength and brand heat from its unique heritage in sports and its high credibility in the latest Lifestyle trends. The brand is associated with some of the greatest sports legends: Pelé, Maradona, Tommie Smith, Boris Becker, Lothar Matthäus, Linford Christie and many more. Today PUMA continues to strengthen its position as a sports brand through partnerships with some of the most elite ambassadors: the world’s fastest man and athletics legend Usain Bolt, star striker Antoine Griezmann, golf stars Lexi Thompson and Rickie Fowler, Arsenal FC, Borussia Dortmund and the Jamaican and Cuban Olympic Federations. PUMA has also developed a unique way of working with cultural and fashion icons to connect with young trend-setting audiences. This has made PUMA one of the hottest sports and fashion brands for young consumers. The partnership that PUMA entered into with Rihanna in 2014 defined a new way for cultural influencers and brands to interact. In recent times, PUMA has been capitalizing on this success and has partnered with other global stars such as model Cara Delevingne, artists The Weeknd and Big Sean and most recently Lewis Hamilton and Selena Gomez.

Also on the product side, PUMA looks back at a unique history full of innovations, designs and products that continue to influence the sports and sports lifestyle industries to date. This includes the Brush Spikes shoe from 1968, the lightest ever football shoe (EvoSpeed SL 2015) and the first ever co-lab of a sports brand with a fashion designer (PUMA x Jil Sander, 1997). One of PUMA’s greatest design icons, the SUEDE will celebrate its 50th anniversary in 2018. Today, PUMA continues to sharpen its design principles and is introducing some of the industry’s most eye-catching but also commercial styles such as the FIERCE, the CREEPER, the TSUGI and the BASKET HEART, some of its bestsellers in 2017. For PUMA, innovation is at the heart of product design. PUMA’s proprietary midsole material IGNITE achieves the highest energy return of all running shoes. The individual lacing system NETFIT as well as JAMMING, the first ever midsole made of freely moving eTPU pearls, are two of the most recent examples.

Women are a priority for PUMA. Not only are women increasingly participating in athletic activities worldwide, but they are also trendsetters in taking inspiration from athletic wear for their everyday wardrobe. Building on PUMA’s fashion credibility and sports authenticity, as well as a profound understanding of the modern female athletic consumer, PUMA has positioned its offer for women “where the gym meets the runway.” The women’s business has further strengthened the brand in 2017 and clearly outgrown other product segments. With its overproportionate market share among women, PUMA is uniquely positioned to capitalize on this growing segment within the global sportswear market. In 2017, PUMA continued with its DO YOU campaign, strengthening its commitment to inspire women everywhere to stay true to themselves, featuring Cara Delevingne, the dancers of the New York City Ballet and many other inspirational women. With the PHENOM, launched with Selena Gomez toward the end of the year, PUMA laid the foundations for another women’s footwear bestseller in 2018.

PUMA has continuously improved the quality of its distribution and expanded its presence in key sports performance and Sportstyle accounts around the world. PUMA remains dedicated to strengthening its relationships with key retailers by being a reliable partner for them and by maximizing PUMA’s contribution to their business. It is a clear objective for PUMA that retail partners make money with our products. Improved sell-through has been helping PUMA to gain more shelf space in our partners retail stores in 2017. Furthermore, PUMA continued to upgrade its owned-and-operated retail store network with further openings and refurbishments. PUMA also worked on the relaunch of its eCommerce presence www.PUMA.com into a more modern and mobile-friendly format, which initially went live in Europe in June last year.

Operationally, PUMA continued to make progress in key areas including further enhancements of PUMA’s International Trading Organization, which manages global order and invoice flows centrally, the roll-out of a new product development system, further standardization of ERP systems and improvements to the overall IT infrastructure. In 2017, for example, a self-developed integrated product development system was introduced to replace existing individual solutions. This simplified and accelerated cross-departmental collaboration between design, product development and product management as well as sourcing, while increasing flexibility.

In addition to these five priorities, social, economic and environmental sustainability remains a core value for PUMA. In 2017, PUMA expanded its strategic partnership with the Better Work Program of the International Finance Corporation (IFC) and the International Labor Organization (ILO). The program, whose aim is to limit audit fatigue and promote long-term solutions to problems surrounding fair labor standards, now involves 76 active PUMA suppliers in Vietnam, Cambodia, Indonesia and Bangladesh.

PUMA’s partnership with IFC was further enhanced with the start of the implementation phase of the Vietnam Improvement Program (VIP), which aims to improve energy efficiency and the use of renewable energy in the apparel and footwear supply chain. Several major industry peers joined the VIP program together with PUMA. This sent a unified message to often shared suppliers to start working on reducing their impact on climate change.

The hard work, the dedication to the PUMA brand and the consistent focus on implementing the Forever Faster corporate strategy contributed significantly to the very positive business development in 2017. This development confirms PUMA’s commitment to reaffirming its strategic goals and continuing its dedication to becoming the fastest sports brand in the world.

PRODUCT DEVELOPMENT AND DESIGN

Designing, developing, selling and marketing footwear, apparel and accessories, PUMA is one of the world’s leading sports brands. Since 1948, PUMA has been producing the most innovative products for the fastest athletes on the planet. The brand has established a reputation for fast and innovative product designs in its Performance categories such as Football, Running and Training, Golf and Motorsports. In addition, PUMA offers a Sportstyle range of innovative performance and sports-inspired products as well as classic silhouettes. With its Sportstyle designs PUMA reaches out to women and men alike who seek authentic style rooted in sports.

In line with our mission statement Forever Faster, we aim at giving athletes the necessary advantage to reach their full potential and express themselves through their own style of play. Their equipment should enable them to reach their full potential. That’s why PUMA is constantly working on innovative technologies and developing new products that meet the high demands of our top athletes and consumers alike. The PUMA brand is driven by four values: brave, confident, determined and joyful. These values motivate us to grow beyond ourselves and to be credible and authentic with our know-how and sporting history as a brand and also with our products, thus enabling us to experience appreciation.

For us, sport is lifestyle. We believe in the fusion of sport and style, aiming to make our products desirable through their ability to meet both performance and stylistic needs. The design of our products involves tenacious attention to what lies ahead while being guided by the consistent visual language, reflecting the most defining moments of the PUMA legacy. To achieve this, PUMA’s Global Creative Director, Torsten Hochstetter and his design teams ensure a coherent design language for all our collections, organizing the product responsibility within our global business units and regional design centers.

In 2017, we further improved our product offering, focusing on our design clarity with clear seasonal creative directions, while introducing innovative technologies and more commercial products. The improved financial results and sell-through performance along with the continued positive response of our retail partners and customers demonstrate that PUMA is on the right path.

A major highlight of 2017 was the introduction of PUMA’s new, uniquely customizable lacing system NETFIT, a technology that offers infinite performance and style options. NETFIT shoes were first spotted at the IAAF World Championships in London, where they were worn by our world class athletes. The NETFIT technology allows runners to fully adapt to their individual needs based on foot shape and running style. At the same time, it allows its consumers to express their individual style through various lacing techniques. NETFIT has been extended into the Sportstyle category as well as our football shoes 365 NETFIT and FUTURE.

“The ‘DO YOU’ campaign was the most powerful women’s statement in 2017. Cara Delevingne’s attitude of staying true to herself has been a unique influence in my life and work. She taught me to always be fearless when making decisions.”

RITA HUANG, SR. HEAD OF MERCHANDISING, TAIWAN

In the Teamsport category we introduced two completely new football boots. PUMA ONE suits all aspects a player needs – FIT. FAST. FEEL. Under the mantra Play Perfect we have combined the best and latest technologies to support technical players with the ideal equipment. PUMA FUTURE, which will hit stores in early 2018, is designed for those players that change the game in an instant, those that play with instinct and invent play on the pitch. It is first football boot with a truly customizable fit thanks to our proprietary NETFIT technology.

With our Run The Streets concept, we have offered products that cross the line between performance and style. We launched the IGNITE evoKNIT, IGNITE Limitless and the new Sportstyle franchise TSUGI. All of them feature PUMA’s proprietary IGNITE midsole technology, but at the same time they have a progressive fresh look inspired by urban culture and street style.

In our Women’s category, we have continued our successful DO YOU-campaign around celebrities such as Cara Delevingne, the New York City Ballet and Selena Gomez by introducing new feminine styles. BASKET HEART, a classic silhouette with a unique feminine touch was one of the best-selling shoes of the year and a big driver behind our women’s footwear business. New footwear styles for 2018 such as MUSE and PHENOM began hitting stores late last year with promising early results. One highlight on the women’s apparel side was the VELVET ROPE collection, which featured tech-infused Sportstyle and Training pieces for women with the perfect mixture of performance and luxury, sport and fashion.

The much-hyped FENTY PUMA by Rihanna line returned with two new seasonal collections, which were celebrated by the global fashion crowd. Once again, FENTY PUMA by RIHANNA made waves and fused luxury and sport in a way that only Rihanna and PUMA can. At the Paris Fashion Week, PUMA’s women’s Creative Director presented FENTY University – a rebellious and daring collection for Autumn-Winter ‘17, paying homage to the kids gone rogue, who hit honor roll and serve detention in style. While for her Spring-Summer ‘18 collection, presented in New York, Rihanna continued to play with gender-fluid silhouettes and oversized shapes paired with sexy bodycon styles. The very successful FENTY CREEPER was released in new styles and colorways, while the FENTY PUMA BOW was searched for on the internet every seven seconds in March, making it the most wanted sneaker of 2017.

Research and product development at PUMA mainly comprises the areas of innovation (new technologies), product design and model and collection development. The research and product development activities range from the analysis of scientific studies and customer surveys through the generation of creative ideas to the implementation of innovations in commercial products. The activities in research and product development are directly linked to sourcing activities.

As of December 31, 2017, a total of 894 employees were engaged in research and development/product management (previous year: 888). Expenses for research and development/product management totaled € 98.5 million in 2017 (previous year: € 93.7 million) of which € 53.4 million (previous year: € 52.0 million) were related to research and development.

SOURCING

THE SOURCING ORGANIZATION

Sourcing refers to the central management of the purchasing of products for PUMA and the Group’s own brand, COBRA. All necessary sourcing functions of the Group are merged in PUMA Group Sourcing (PGS).

PUMA International Trading GmbH (PIT), PUMA’s globally active trading company which has its head office in Herzogenaurach (Germany), is the Group company mainly responsible for PUMA Group Sourcing. PIT coordinates product sourcing from independent manufacturers by sourcing products itself from the manufacturers and selling them to PUMA distribution subsidiaries or supporting PUMA distribution subsidiaries directly in the local sourcing of products via local manufacturers. In addition, through its service companies in Hong Kong, PIT manages cooperation with suppliers worldwide and also oversees the production processes at the sourcing sites in China, Vietnam, Bangladesh, India, Turkey, South Africa, Brazil and Mexico. Hedging is also centralized at PIT. The centralized control of these processes guarantees a high degree of transparency within the supply chain, reduces sourcing complexity and creates efficiencies through largely automated processes.

PGS’s worldwide production network, which is the main focus of PIT’s efforts, helps to optimize the supply chain by working with independent manufacturers. The aim is to offer an optimum service so as to meet global requirements for service, quality and safety, along with environmental and social aspects in the supply chain. Under the six core principles of partnership, transparency, flexibility, speed, simplicity and effectiveness, the central sourcing responsibility allows for continuous improvements with regard to sourcing costs, sourcing flexibility and the necessary delivery reliability. This guarantees distribution subsidiaries high-level service and a sustainable production and supply chain.

PUMA’s sustainability function (Corporate Sustainability Department, formerly PUMA SAFE) was successfully integrated into the PGS organization in 2016. This ensures that social and environmental issues and standards of good corporate governance are integrated into day-to-day sourcing activities. The service companies in Hong Kong that are managed by PIT are mainly responsible for compliance with PUMA’s own standards and statutory standards.

In 2017, further operating improvements could be implemented in sourcing, in particular with regard to the centralization and standardization of processes and systems. In this way, PIT has also acted as a central import company for EU countries since the start of the year, in addition to its tasks previously described. Sourcing effectiveness could subsequently be further increased. Provided it made sense from an economic and sustainability perspective, local sourcing was expanded further in some markets, for example in Mexico, so as to be able to react even more flexibly to market developments. Furthermore, 2017 saw the successful continuation of the innovative financing program for PUMA suppliers. This program, which was financed by the World Bank and BNP Paribas and which has received a number of awards, allows for receivables of the suppliers from goods delivered to PUMA to be paid more quickly provided they meet the sustainability criteria. As a result, financial scope was created for new investments for suppliers. In addition, the program for suppliers also acts as a financial incentive for complying with its standards regarding ecology, labor law and society, as well as continuously improving them.

THE SOURCING MARKETS

During the financial year 2017, PGS worked with 160 suppliers in 34 countries via PIT. PIT’s supplier base has therefore largely remained stable. The strategic cooperation with long-term partners was one of the key competitive advantages in 2017, ensuring stable sourcing in continuing turbulent market conditions.

Asia remains the strongest sourcing region overall with 92% of the total volume, followed by Europe with 4%, America with 3% and Africa with 1%.

As a result, the six most important sourcing countries (89% of the total volume) are all located on the Asian continent. Once more, Vietnam was the strongest production country with a total of 32%. China followed at 24%, an increase of 1 percentage point from 2016. Cambodia was in third place at 13%. Bangladesh, which focuses on apparel, is in fourth place at 10%. Indonesia, which focuses on footwear production, produces 6% of the total volume and is in fifth place. India is in sixth place at 4%.

Rising wage costs and macroeconomic influences have continued to influence sourcing markets in 2017. This increases the need to take into account the risks of these factors when allocating production. This is a crucial Component of our sourcing strategy so as to ensure the secure and competitive sourcing of products and, furthermore, to successfully manage the increasing sourcing volumes due to the positive company development.

EMPLOYEES

NUMBER OF EMPLOYEES

The global number of employees on a yearly average was 11,389 employees in 2017 compared to 11,128 in the previous year. The increase mainly results from the higher number of the company’s own retail stores.

Personnel expenses in 2017 increased overall by 11.4% from € 493.1 million to € 549.1 million. On average, personnel expenses were € 48.2 thousand compared to € 44.3 thousand in the previous year.

As of December 31, 2017, the number of employees was 11,787, compared to 11,495 in the previous year. This represents a 2.5% increase in the number of employees compared to the previous year. The development in the number of employees per area is as follows:

TALENT RECRUITMENT AND DEVELOPMENT

Our employees represent the core of our business. In order to continue to expand our position in the market, it is essential that we have highly qualified and motivated personnel. Our recruitment strategy allows for external talent to be recruited in advance, appropriate to the target group, via various channels, including in particular through proactive direct conversations, thereby boosting our workforce.

This year we introduced Workday, one of the leading human capital management systems, across the world. This software includes all personnel processes and functions such as recruiting, talent, performance and absence management, time recording and payroll accounting in the USA and Canada, meaning that all information relevant to human resources is available on a single platform.

In addition to the performance assessment and time agreement, a systematic succession plan is created as part of talent management. Talent available in the company is identified in the annual employee interviews. Our aim is to individually develop our employees, even in an international environment and at the same time successfully and sustainably keep them loyal to our company as they are an important factor for success. As a central component of current competitiveness, long-term loyalty from motivated and competent employees allows us both as a company and as an employer to maintain a dynamic environment and to be able to keep up with market changes.

The continuous professional and personal development of our employees also ensures that our workforce has the necessary skills to ensure steady growth and market expertise. In our efforts to provide adequate entry-level and development opportunities to talented individuals at all levels, in addition to the range of different training and dual-track (combined work-study) programs, we also promote the systematic training of our professionals and managers. The range of training we provided includes a number of training courses and workshops, both online and offline and standardized or personally tailored to individual needs. The continuous development of our PUMA training offers guarantees that our employees have at all times innovative and diverse opportunities to add to their qualifications, build on existing knowledge and acquire new skills. This approach helps employees achieve their personal goals and helps the company achieve its goals as well.

In particular, we also offer a large number of seminars with the aim of developing employees and managers over the longer term, giving them the opportunity to apply their newly acquired knowledge in practice between the individual modules and then to discuss this with other seminar participants. Our internal leadership program, ILP, consisting of several modules, was expanded by the ILP2 seminar series. Management was therefore given new instruments to be able to manage the company better in a world changing at increasingly greater speed and to be able to manage its employees in an even more strategic and effective manner. The topic of mindful leadership was of particular focus. Management was made aware of its own stress patterns and learned mindfulness-based methods to actively combat stress and construct suitable alternative actions. Learning mindful communication supports clear thinking and being able to act in a more conscientious fashion.

Our new SPEED UP2 personnel development program was successfully continued this year. A group of top talent received intensive preparation for the next step in their careers by taking on interdisciplinary projects and tasks, target training courses, mentoring and coaching in addition to job rotations. Increased visibility to upper management, the creation of cross-function cooperation and establishing a strong network are also important components of this program.

COMPENSATION

We at PUMA offer our employees a targeted and competitive compensation system, which consists of several components. In addition to a fixed base salary, the PUMA bonus system, profit-sharing programs and various social benefits and intangible benefits form part of a performance-based compensation system. We also offer long-term incentive programs for senior management levels that honor the sustainable development and performance of the business.

“Since I work on the Women’s segment from the strategy side, for me one of PUMA’s greatest achievements in 2017 was our continued growth in the Women’s market. It is always fun to see how great teamwork can lead to disruptive products and impactful storytelling.”

MAXIMILIAN STAIGER, MANAGER GLOBAL STRATEGY, GERMANY

MANAGEMENT SYSTEM

We use a variety of indicators to manage our performance in relation to our top corporate goals. We have defined growth and profitability as being key targets within finance-related areas. Our focus therefore is on improving sales, the gross profit margin and operating income (EBIT). These are the financial control parameters that are of particular significance. Moreover, we aim to minimize working capital and improve free cash flow. Our Group’s Planning and Management System has been designed to provide a variety of instruments in order to assess current business developments and derive future strategy and investment decisions. This involves the continuous monitoring of key financial indicators within the PUMA Group along with a monthly comparison with budget targets. Any deviations from the targets are analyzed in detail and appropriate countermeasures are taken should such deviations have a negative impact.

Changes in sales revenues are also influenced by currency exchange effects. This is why we also state any changes in sales in euro, the reporting currency, adjusted for currency exchange effects in order to provide information that is relevant to the decision-making process when assessing the revenue position. Currency-adjusted sales volumes are used for comparison purposes and are based on the values that would arise if the foreign currencies included in the consolidated financial statements were not translated at the average rates for the previous reporting year but were instead translated at the corresponding average rates for the current year. As a result, currency-adjusted figures are not to be regarded as a substitute or as superior financial indicators, but should instead always be regarded as additional information.

We use the indicator free cash flow in order to determine the change in cash and cash equivalents after deducting all expenses incurred to maintain or expand the organic business of the PUMA Group. Free cash flow is calculated from the cash flow from operating activities and investment activities. We also use the indicator free cash flow before acquisitions , which goes beyond free cash flow and includes an adjustment for payments that are associated with investments in companies.

We use the indicator working capital to assess the financial position. Working capital is the difference between other current assets – including in particular inventories and trade receivables – and current liabilities. Amounts that are received in connection with financing activities are not included in working capital.

Non-financial performance indicators are of only minor importance at PUMA as control variables.

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Overview 2017

PublicisPixelparkAdmin — Fri, 02 Feb 2018 09:47:33 +0000

OVERVIEW 2017

2017 WAS ANOTHER SUCCESSFUL YEAR IN THE HISTORY OF PUMA, MARKED BY SPORTING HIGHLIGHTS AND A VISIBLE IMPROVEMENT IN OUR BUSINESS. WHILE OUR ATHLETES WERE ABLE TO DRAW ATTENTION TO THEMSELVES AT THE WORLD’S BIGGEST SPORTING EVENTS, IN 2017 WE SUCCEEDED IN PASSING THE SYMBOLIC SALES MARK OF FOUR BILLION EURO FOR THE FIRST TIME.

In keeping with PUMA’s goal of becoming the fastest sports brand in the world, our focus was to strengthen our credibility as a sports brand through partnerships with some of the world’s most successful athletes, such as athletics legend Usain Bolt, star striker Antoine Griezmann, golf star Rickie Fowler as well as teams such as Arsenal FC and Borussia Dortmund, to name just a few. In the Sportstyle business, we continued our collaboration with mega star and style icon Rihanna as well as with top model Cara Delevingne. Through their individuality and their commitment to the PUMA brand, all of our brand ambassadors played a major role in increasing our sell-through in 2017. We further strengthened our position as a sports brand and further increased our brand heat by signing contracts with new sports stars and culturally relevant influencers. We were extremely proud to welcome singer, actress and producer Selena Gomez as brand ambassador for our women’s segment in 2017. We have also expanded our portfolio of brand ambassadors in the men’s segment and started a collaboration with the musicians The Weeknd and Big Sean. In addition, we have further strengthened our cooperation with Formula One world champion Lewis Hamilton through our new campaign 24/7, which redefines the brand’s performance philosophy at a time when workouts are no longer constricted to the gym.

Overall, the strong demand for PUMA’s Performance and Sportstyle product offerings proved that we have successfully managed to increase the commercial appeal of our products. Our new product lines such as PUMA ONE, NETFIT, TSUGI and the latest FENTY PUMA by Rihanna collections received very positive feedback both from our retail partners and our consumers. This is clear proof that PUMA is on the right path.

PUMA’s Teamsport category looks back on a successful year with exciting product launches and sporting achievements. Our partnered teams grabbed some of the world’s biggest football trophies at the end of the 2016/17 football season: Borussia Dortmund snatched the German DFB Cup, while Arsenal FC claimed the FA Cup and Mexico’s Chivas won the 2017 Liga MX Clausura title. PUMA’s roster of individual players also reached new heights: Arsenal’s Olivier Giroud was honored with the FIFA best goal award, while Sergio Agüero broke the goal scoring record for Manchester City. On the product side, innovative products and technologies hit the shelves. A strategic launch for the Teamsport category being the first PUMA ONE football boot, which excels in FIT. FAST. FEEL.

In the Running category, the past year was marked by a major sporting event, the 2017 IAAF World Championships, which also marked the end of Usain Bolt’s active career. The competition put the spotlight on some of the new generation of PUMA athletes, one of them being the 800 meter gold medalist Pierre-Ambroise Bosse. PUMA took performance footwear to the next level with the unveiling of its revolutionary NETFIT range, whose uniquely customizable lacing system offers infinite performance and style options in one shoe.

PUMA’s Motorsport category was driven by a fantastic season in Formula One, which was once again dominated by our sponsored teams: MERCEDES AMG PETRONAS, Scuderia FERRARI and RED BULL RACING formed the Top 3 of the Constructors’ Championship, while Lewis Hamilton was crowned F1 world champion for a fourth time.

PUMA’s golf business continued to deliver stylish, performance-ready golf apparel, footwear and accessories to the market while COBRA PUMA Golf supplied the market with technologically advanced golf equipment. COBRA is particularly proud of the launch of its smart drivers KING F7 & F7+, which allow golfers to automatically track the distance and accuracy of each drive.

Our Women’s business was one of the highest performers of 2017. We have taken our successful and ongoing DO YOU campaign to the next round, aiming to inspire confidence in women around the world with powerful female ambassadors such as Cara Delevingne and the New York City Ballet. Meanwhile, the FENTY PUMA by Rihanna collections have established themselves among the world’s most anticipated fashion shows. For Autumn-Winter ’17, PUMA’s women’s Creative Director Rihanna presented her FENTY University collection with great success at the Bibliothèque Nationale de France in Paris. While for her Spring-Summer ’18 collection she returned to New York Fashion Week in autumn, introducing her latest daredevil styles at the majestic Park Armory among dunes of illustrious pink sand and motocross riders in the air.

With the Run the Streets campaign, innovative footwear silhouettes debuted throughout the year and elevated our sports-inspired streetwear game in 2017. With an innovative and progressive look amped up with new technologies, the all-new TSUGI range pushed our design to the next level. The highly anticipated debut of the PUMA x XO collection which was designed in collaboration with The Weeknd caused a worldwide sensation toward the end of the year.

On the distribution side, we focused on strengthening our relationship with key retailers. It is important to us to be a reliable partner and to maximize our contribution to their business. We also established new partnerships with strong retailers both in mature and emerging markets. PUMA’s improved sell-through has enabled us to gain more shelf space for our products in our partner’s retail stores in 2017. In addition, we continued to upgrade our owned-and-operated retail store network with the Forever Faster look and feel. We gained further momentum in the eCommerce business, while working on the relaunch of www.PUMA.com into a more modern and mobile-friendly format that went live in Europe last summer.

Operationally, we continued to make progress in key areas including further enhancements of our International Trading Organization, which manages global order and invoice flows centrally, the roll-out of new product development tools, further standardization of ERP systems and improvements to the overall IT infrastructure.

With the expansion of our headquarters, which will be completed this spring, PUMA set out a clear commitment to our roots in Herzogenaurach. After its completion, the new administrative building will provide space for up to 550 employees. This will enable us to reunite our workforce in Herzogenaurach for faster decision-making at this location. The 37-meter pylon of the PUMA bridge, which connects both buildings, also represents a new landmark for Herzogenaurach as a true gateway to the city.

The consistent implementation of the Forever Faster company strategy contributed to PUMA being able to exceed the sales mark of four billion euros for the first time in company history in financial year 2017. This proves that, with regard to increasing our brand heat and improving our product range, we are on the right path. Sales growth was especially driven by the footwear segment, which has already been showing increasing sales for 14 quarters in a row and which is the main driver of PUMA sales growth. Accordingly, consolidated sales increased by 15.9% currency-adjusted in 2017. Therefore, the currency-adjusted sales growth in a high single-digit percentage rate prospected in the previous Annual Report for 2017 was considerably exceeded. The forecast of currency-adjusted sales growth of 14% to 16%, that was adjusted upwards during the year, was achieved at the upper end. In the reporting currency, the euro, this corresponds to an increase in sales of 14.0% from approximately € 3.6 billion in the previous year to approximately € 4.1 billion in 2017.

Despite ongoing negative currency effects, the gross profit margin improved in 2017 by 160 basis points to 47.3% because PUMA was able to compensate for more than the negative effects of the weakness of individual currencies against the US dollar due to improvements in sourcing, higher sales with new products with a higher margin, a higher share of own retail sales and selective price adjustments. Other operating income and expenses increased in 2017 by only 11.7%. In terms of sales, this represents a decline in the cost ratio from 42.6% to 41.7% and reflects the operating leverage achieved. Overall, both the increase in sales, the improvement of the gross profit margin and the only moderate growth of other operating income and expenses in comparison to sales significantly contributed to the increase in the operating result (EBIT) in financial year 2017.

The operating result increased in 2017 by 91.7% from € 127.6 million to € 244.6 million and was therefore considerably above the forecast from the previous Annual Report which had originally forecast an operating result within a range of € 170 million and € 190 million. Due to this better-than-expected business development, the forecast for the 2017 operating result saw an upward increase several times throughout the year. The adjusted forecast of an operating result within a range of between € 235 million and € 245 million could be achieved at the upper end.

The considerable increase in profitability in 2017 is also reflected in the development of net earnings and earnings per share, each of which more than doubled. Net earnings increased in 2017 by 117.7% to € 135.8 million (previous year: € 62.4 million) and the earnings per share increased accordingly from € 4.17 in the previous year to € 9.09.

Due to the very successful business development in 2017 with a considerable increase in profitability and free cash flow, the Managing Directors and the Administrative Board will propose to the Annual General Meeting on Thursday, April 12, 2018 to distribute a one-off dividend of € 12.50 per share for 2017 (previous year: regular dividend € 0.75).

The PUMA share developed very positively in 2017 and was listed at year-end at € 363.00, a 45.5% increase over the share price at the end of the previous year (€ 249.65). This means that PUMA Group market capitalization has risen to around € 5.4 billion (previous year: € 3.7 billion).

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Our People

PublicisPixelparkAdmin — Fri, 02 Feb 2018 09:46:22 +0000

OUR PEOPLE

WE BELIEVE OUR PEOPLE ARE THE KEY TO UNLEASHING PUMA’S FULL POTENTIAL. OUR AMBITION IS TO PROVIDE NOT ONLY AN ATTRACTIVE WORKING ENVIRONMENT THAT ENCOURAGES THEIR PERFORMANCE AND PERSONAL DEVELOPMENT, BUT ALSO A UNIQUE CORPORATE CULTURE.

We are committed to improving our employees’ wellbeing, both during and outside their working hours.To pursue our mission of becoming the world’s fastest sports brand and with the aim of establishing PUMA as a top employer, we have drawn up a set of employer values to communicate our unique way of working and act as a guide for our people. Under the label SPEED AND SPIRIT, we encourage our people to BE DRIVEN, BE VIBRANT, BE TOGETHER and BE YOU, thus allowing us to make full use of the individual talent and experience within the company. In 2017, we focused on defining our HR communications strategy and creating a clear identity and voice for each of our HR programs. We intend to position PUMA as an attractive employer to potential candidates, while ensuring we recruit the right talent to push PUMA forward. Through our employer values, we aim to give potential candidates an insight into what working at PUMA is really like and what makes our brand special. We have selected some of our people to become ambassadors and tell their own PUMA story on social media to audiences internal and external to PUMA.

Our particular focus is on two areas: the health of our employees and our community engagement work, which helps us make a positive impact in communities wherever PUMA operates. Following a decision by our Board of Directors, we have recently established the necessary reporting systems for this task, as well as introducing the relevant targets and bonuses.

A MILESTONE IN PEOPLE MANAGEMENT

In 2017, HR achieved a major milestone by implementing Workday, a leading human capital management system, on a global scale. All HR-related information is now available on one single platform across all global entities, enabling us to run nearly all our processes digitally. This software solution covers all HR processes and functions, including recruitment, talent and performance management, payroll, time tracking and absences, as well as remuneration and benefits in Canada and the USA. It also gives our HR teams worldwide real-time access to relevant data.

Our employees will greatly benefit from this new system, as it has also become easier and quicker for them to access pay slips, organizational charts, leave balances and reports. At the same time, we also offer them the opportunity to handle their own personnel profile and to update their work experience and qualifications at any time. This keeps them visible within the organization, ensuring that their full employment history can be considered for potential vacancies during talent conferences.

CAREERS@PUMA

GROWING TALENT

Growing tomorrow’s talent is a key pillar of PUMA’s development strategy. We are particularly focused on recruiting graduates we can train and successfully equip with the relevant skillsets for various roles in the PUMA Group. We offer a wide range of options within an international working environment, creating the perfect conditions for people starting their careers.

Last year, 18 dual-program students and apprentices joined PUMA headquarters in Herzogenaurach. In total, PUMA had 63 apprentices and dual students by the end of 2017, majoring in a range of subjects, from International Business to Warehouse Logistics. Specialist vocational training allows them to gain knowledge and expertise which will serve them well in their careers at PUMA.

Our intention is to raise awareness of PUMA as a top employer and ensure that we attract the best talent on the market to work for us. To identify that talent, we have strengthened our cooperation with universities in Germany and abroad. One of our key initiatives involved a business simulation, during which business students were provided with some industry insights to help them work on a case study. Design students across Europe were offered the opportunity to take part in design challenges, supported by our Global Design Leadership Team. The winners were invited to present their designs at our headquarters in Herzogenaurach.

We also established a mentoring program for students as an additional tool for identifying talented people at an early stage in their careers and to involve them in internships, apprenticeships or as working students. This means we give them the chance to get to know PUMA and to gain initial working experience in a fast-moving environment.

TALENT MANAGEMENT

Professional talent management and succession planning are essential for our company’s long-term development and success. Systematic talent conferences, assessing the entire PUMA workforce, were conducted worldwide with managers at all levels, up to and including board conferences at Managing Director level. We constantly review our talent on the basis of criteria including individual performance, potential, ambition, career progression and mobility. This analysis of employee profiles at PUMA allows us to prepare individual development plans at the same time as providing an overview of talent across all areas of the business. We can identify internal candidates for key positions at an early stage by matching internal talent with vacancies, helping us find potential successors with the necessary skills. This process also provides attractive career and development opportunities for our employees and ensures professional talent management and succession planning.

Our new personal development program SPEED UP² was successfully continued this year. By taking on interdisciplinary projects and tasks, targeted training, mentoring and coaching, as well as job rotations, a group of top talents receives intensive preparation for the next step in their careers. Other essential components of the program include increased visibility at top management level encouraging cross-functional cooperation and building strong networks.

PEOPLE@PUMA

DIVERSITY

At PUMA we believe the diversity of our people is one of our great strengths as a company and that it makes a major contribution to our unique culture. We are convinced that our success and competitiveness depend on our ability to embrace diversity by bringing together people of different nationalities with a variety of backgrounds and experiences and helping them to turn their individual talents and ideas into innovative solutions that respond to ever-changing market and customer demands.

It was this belief that led us to commit to the PUMA Code of Ethics and our Diversity Charter more than ten years ago. We implemented the Diversity Charter to ensure a fair working environment and equal opportunities for all PUMA employees, regardless of gender, nationality, ethnicity, religion, disability, age or sexual orientation.

The people working together at our global headquarters in Herzogenaurach come from 62 different nations. To ensure that new employees gain an understanding of cultural differences, something which will make their working lives easier and more productive, we offer a one-day cultural awareness course to all new employees based at the headquarters.

The gender distribution of employees at PUMA worldwide is well balanced; with a male to female ratio of 52%:48%. These figures have remained stable in recent years.

In 2017, the proportion of women across all levels of management group-wide was 38%. Although this number has increased in recent years, we aim to further increase the number of women in executive positions, especially at senior management levels. To achieve this in 2015, we committed ourselves to raise the quota of women in the two management levels beneath the managing directors to 20% and 30% respectively. These targets were achieved (and, in some cases, slightly exceeded) at the group level by the end of June 2017. This year we have set ourselves ambitious new goals and are aiming to increase the proportion of women at the two management levels beneath the managing directors to 30% and 40% respectively. PUMA intends to constantly empower women and to support their development in management positions. That’s why we offer them specific training and access to inspirational networks. Contact with experienced female executives is designed to encourage our female employees and motivate them to take on leading roles within the company.

WORKS COUNCIL

In 2017, the European Works Council of PUMA SE represented employees in 9 countries. Men and women are equally represented on the council. The chairperson is a German national and the other members of the Executive Committee are from Austria and Italy.

The German Works Council of PUMA SE has 15 members; 10 men and 5 women. The chairperson and the vice chairperson are both German nationals.

The interests of employees with disabilities are represented by a designated member of the Works Council.

OCCUPATIONAL HEALTH AND SAFETY

We strive to keep our people healthy and safe by providing a work environment in which health and safety issues are taken seriously. Our goal is to constantly reduce the average injury rate. In 2017, we aimed to stay below an injury rate of 1.5 (OSHA). We conduct safety-related training courses all over the world, including online training programs, to prepare employees for potential emergency situations and reduce the number of accidents.

We provided a total of 12,242 hours of safety training in 2017. In the past year, 5,669 employees have been trained in fire evacuation and 2,327 in first aid. The overall number of safety training hours has increased by 29% compared to the previous year, demonstrating PUMA’s continued focus on this issue.

Worldwide, only 84 occupational accidents which required worked to be stopped were recorded in 2017. This is a decline of 12% compared to the previous year and continues the positive trend evident in recent years. According to the Occupational Safety and Health Administration (OSHA), this corresponds to an injury rate of 0.72 compared to 0.84 in 2016, meaning we met the target we set ourselves in 2017. The (OSHA) injury rate for PUMA SE was at 0.83 in the past two years.

A further indicator of employee engagement and the health of our workforce is the rate of sickness absence, which was again below 2% in 2017.

Our Health and Safety Committee, based at our global headquarters in Herzogenaurach, includes members of the Works Council, representatives of Human Resources and in-house service departments, our company physician and a health and safety engineer.

COMPENSATION AND BENEFITS

PUMA offers an attractive set of compensation and benefit programs worldwide, designed to attract the best talent on the market as well as to retain and reward talented employees.

Collective bargaining agreements are in place at many of our facilities and stipulate both an above-average salary by industry standards and a generous annual leave allowance. PUMA also offers a variety of benefit plans, including defined contribution and deferred compensation retirement plans. Regular compensation and benefit reviews ensure PUMA remains competitive in the market, in accordance with our corporate goals.

Since we believe that strong performance should be rewarded, we aim to a compensation program in line with individual and/or business performance. Short-term and long-term incentives or bonus plans are available to employees at certain levels of management. Short-term incentive plan payouts are linked to business performance and sustainability targets.

WORKING CONDITIONS AND FLEXIBLE WORKING MODULES

At PUMA, we focus on creating an attractive and pleasant working environment in order to positively influence employee engagement and foster loyalty and commitment to the company. Our goal is to minimize the number of employee-initiated exits and to keep the percentage of employees in permanent employment above 80%. Last year, 87% of our employees worldwide held permanent contracts and the employment terms of over 30% of our employees were covered by a collective bargaining agreement. Staff turnover is strongly dependent on the share of retail business in individual regions and markets. The total turnover rate in 2017 was 22%, which was again 3% lower than in the previous year. The average age of all PUMA employees was 33.

Flexibility in the workplace allows our workforce to arrange their working conditions to suit their individual needs. This ultimately leads to a more productive and engaged workforce. This is why flexible working modules are available in most of our locations around the world. This is also reflected in the proportion of employees employed on a part-time basis, which was 23% at the end of 2017.

After a successful initial testing phase, we decided to test our innovative office concept in even more departments to help define how our employees’ state-of-the-art workplace should look. We found that designated areas for individual work and for socializing were indispensable in an open-plan environment, as they allowed our employees to focus and engage in teamwork. Our new offices in Hong Kong, Korea, Mexico, South Africa and the Netherlands were all furnished on the basis of this research in 2017.

“To highlight one of our greatest successes in 2017, I think of PUMA Hong Kong moving to a new office last summer. The flexible environment offers open spaces to encourage interaction and most importantly, it means our sales team and sourcing team are together.”

SARA NG, REGIONAL DIRECTOR, HUMAN RESOURCES APAC, HONG KONG

SOCIAL MEDIA

At PUMA, we are looking for the most qualified and talented people to help us push sports and fashion forward. Sites such as LinkedIn, Facebook and Glassdoor offer us a tremendous opportunity to connect with candidates and find great talent. Since 86% of professionals in their first decade of employment use social media to look for jobs and research employers, leveraging our corporate social media pages for recruitment purposes has become a key aim for PUMA. We strategically promote our vacancies using social media, utilizing powerful tools like targeting, segmentation and promotion. We have also leveraged these platforms for active sourcing, allowing us to connect with candidates directly.

However, recruiting via social media goes beyond posting vacancies reported in company records. It is essential that we share content which promotes our motto of SPEED & SPIRIT and reflects PUMA’s employer values, as part of our goal to present the company’s culture to candidates around the world.

Our efforts to create an environment that nurtures and motivates our employees were rewarded with multiple prizes in several regions in 2017. Based on employee feedback on Glassdoor, PUMA was ranked the 5th best place to work in Germany. FOCUS magazine rated PUMA as providing the best career opportunities for IT specialists in the fashion industry. Other PUMA facilities, for example in Boston, China or Malaysia, have been honored in their own countries.

LEARN@PUMA

At PUMA, learning is not only part of our culture but the consistent professional development and training of our people is key to PUMA’s strategy. As the world changes at an ever-increasing pace, bringing with it digitalization and social change, only highly-qualified and motivated professionals will enable us to reach our goals. To ensure our people are able to make full use of their talents and develop their skills and expertise, PUMA offers a wide range of fixed and tailored training courses and workshops, both on-site and online. We place a particular emphasis on introducing and conveying the attitudes and methods found in agile organizations. In 2017, 12,225 employees worldwide participated in training courses and workshops over a total of 174,568 hours. This is a significant increase compared to the previous year.

PUMA LEARNING PLAZA is our learning platform providing access to a host of online content available to all employees and managers. In addition to internal PUMA content, employees can access selected business books, articles and TED videos. Our employees also have access to the interactive learning platform lynda.com, which includes more than 6,300 video tutorials and self-study courses.

Our main tool for establishing a consistent leadership approach at a global level is the modular International Leadership Program (ILP). It supports managers in their leadership skills and day-to-day decisions and is conducted globally with groups of participants in the EMEA, APAC, LATAM and North America regions. ILP², a further-development of the previous ILP program, was launched in 2017. Its innovative content focuses on leadership in a volatile, uncertain, complex and ambiguous world, providing managers with new tools to manage themselves better and to become even more strategic and effective leaders.

One module deals with mindful leadership, which is defined as the practice of self-observation without judgment, along with a focus on our minds and inner voices. Managers learn to understand their own stress patterns and become familiar with effective methods for avoiding stress and ensuring clear-thinking when confronted with complex decisions.

We place particular emphasis on organizational agility. Managers become familiar with tools and agile methods such as stand-up meetings or design thinking. Implementing agile ways of working will strengthen PUMA’s ability to react quickly and adapt to changes on the market.

WELLBEING@PUMA

At PUMA, providing a positive workplace and promoting the wellbeing of all our people is a top priority. Under the umbrella of Wellbeing@PUMA, we have combined the four topics Flex, Social, Finance and Athlete. This concept has been awarded the German audit berufundfamilie (audit job and family) certificate. Pioneered at our headquarters at Herzogenaurach, the Wellbeing@PUMA concept has been embraced by various PUMA subsidiaries around the world and adapted to local needs and regulations.

With flexible working hours, mobile working, sabbaticals and parent/child offices as well as a range of family services and childcare opportunities, we are supporting our people’s work-life balance. In line with our sporting heritage, we offer a variety of sporting events and activities throughout the year, as well as regular internal sports classes using our own sports facilities. No fewer than 20 events and 17 weekly sports classes were organized for our people at our headquarters in 2017, with a total of 1,551 registrations. Similar initiatives and courses are being adopted worldwide.

“I started my career at PUMA as an intern in Human Resources. After I had the opportunity to help shape a lot of exciting projects, PUMA offered me a permanent position at the end of my studies. Inspired by the chance to become a real part of the PUMA family, I didn’t have to think twice! New position, same team – a perfect match!”

PATRICK EGLMAIER, JUNIOR MANAGER LEARNING & DEVELOPMENT, GERMANY

ENGAGE@PUMA

CHARITY CAT

2017 was a very prolific year for Charity Cat. The non-profit organization established by a group of PUMA employees in 2004 continues to grow and is supporting projects all over the world. Charity Cat works on local and international projects and supports long term collaborations as well as short-term work for good causes.

Last year Charity Cat was particularly proud to establish a new partnership, supported by PUMA, with a Colombian NGO that uses football as a vehicle for training and mentoring children in one of the poorest areas of Cartagena. For projects like these, the members of Charity Cat organized a series of fund-raising events throughout the year, raising significant amounts of money for those who needed it most.

Charity Cat also gathered donations for Mexico after the country was hit by devastating earthquakes. Charity Cat joined forces with PUMA employees in every region to collect donations for TOPOS, the main NGO supporting the disaster relief effort in the area. The full donation campaign was helt during our 360 meeting in Herzogenaurach and was extremely well-supported. Our staff raised over 2,000 euros, making a significant contribution in support of the victims.

Besides the international projects, Charity Cat also continued to maintain its long-term collaborations with a number of German non-profit organizations, such as the Bolle childcare center in Berlin and the Sozialtreff in Erlangen, which supports socially and economically disadvantaged people in the surrounding area.

Another example of Charity Cat’s long-term projects is its partnership with an orphanage in Haiti, an initiative that has been ongoing for more than six years and that will be further developed in the future.

Charity Cat is also involved with organizations linked to sports. Charity Cat participated in the Run against Cancer that takes place annually in Erlangen.

Another notable project was its work with the sports therapy department of the university hospital of Erlangen to provide better equipment for the treatment of long-term illnesses at the hospital.

In October 2017, Charity Cat organized a clothing donation from PUMA employees, who donated over 150kg of clothes to the Red Cross in Nuremberg.

“TODAY I GOT A CHANCE, ALONG WITH MANY OTHER VALUABLE COBRA PUMA GOLF EMPLOYEES, TO GIVE BACK TO OUR LOCAL COMMUNITY BY HELPING CLEAN UP THE AGUA HEDIONDA LAGOON TRAIL IN CARLSBAD. WHAT A FANTASTIC DAY!”

ERIC LOGAN, COO COBRA PUMA GOLF

COMMUNITY ENGAGEMENT

Thanks to our employees all around the world, we were able to continue our engagement with local communities this year. Our goal was to reach the total number of hours spent on community engagement was the equivalent of one hour per average FTE (Full Time Equivalent) per year. We reached out to all our people worldwide to inform them about this work and encourage them to participate. In addition, an online platform has now been set up on which projects and engagement can be recorded. Local Human Resources departments found new partners in their communities and initiated a variety of projects. In total, initiatives led by our subsidiaries on five continents led to a total of 17,471 hours (1,425 for PUMA SE) of community engagement focused on protecting the environment, promoting health and fitness, fighting discrimination and supporting children with their education, while working alongside local non-profit organizations. Considering that the number of FTEs in 2017 was 11,389 (975 for PUMA SE), we far exceeded our target.

On a global level, we started a new three-year partnership with the international organization Right To Play, which uses sports and play-based learning to support underprivileged children. After all, there is no better teacher of life skills than sports.

Last but not least, we engaged alongside our brand ambassadors in 2017, such as Cara Delevingne who worked together with the United Nations High Commissioners for Refugees, Rihanna and her foundation, and the Daily Paper label, working together with Right To Play in Ghana to make a positive impact on communities.

Together with our parent company Kering, which offers additional solidarity leave and mentoring programs, we aim to raise awareness of human rights challenges and connect our employees to their communities. We know that sports has the power to change the world and we are proud to be part of the game. Achieving a positive impact while becoming ever-faster is an important part of our company culture.

A BIG THANK YOU TO ALL OUR EMPLOYEES WORLDWIDE FOR THEIR WHOLE-HEARTED ENGAGEMENT THROUGHOUT THE YEAR.

“My greatest success in 2017 was the launch of our new global people management tool – Workday – in record time. Moving from Canada to Herzogenaurach to work on this intensive project was a big challenge and brought me greater knowledge, relationships and opportunities. I am looking forward to working on new projects!”

CAMILLE HOEVEN, HUMAN RESOURCES BUSINESS PARTNER HRIS & PROJECTS, GERMANY

The post Our People appeared first on PUMA Annual Report 2017 - Forever Faster PUMA.

Sustainability

PublicisPixelparkAdmin — Fri, 02 Feb 2018 09:45:41 +0000

INTRODUCTION

The Managing Directors of PUMA SE remain firmly committed to the 10 principles of the United Nations Global Compact, as well as the United Nations Guiding Principles of Business and Human Rights. We are committed to acting responsibly, be it with regard to our own employees, our business partners, consumers, the communities in which we operate or within our supply chain.

In 2017 we focused on creating a positive impact, firstly by integrating sustainability into the core business functions of PUMA via our company-wide 10FOR20 Sustainability Targets and secondly by taking an active role in industry-wide initiatives, such as the Sustainable Apparel Coalition and the Zero Discharge of Hazardous Chemicals Foundation.

We expanded our human rights due diligence process with a human rights assessment in our supply chain and created a heat map of potential risk areas.

We also moved our Global Stakeholder Sustainability Meeting to Asia, where most of our suppliers are based.

In addition, we published the results of our 2016 Environmental Profit and Loss Account, which summarizes the external environmental impact of our business activities in financial terms.

The execution of our 10FOR20 Sustainability Strategy continues as planned:

The number of shared compliance audits with our industry peers doubled and the joint industry assessment tool from the Social & Labor Convergence Project, which will replace our own audit tool in the future, was piloted.
The wastewater guidelines of the Zero Discharge of Hazardous Chemicals Foundation (ZDHC), an industry-wide initiative developed with other major brands, were implemented in 42 main factories. These guidelines will lead to a reduction of testing costs as well as clarity on what good wastewater treatment practices look like.
In cooperation with several major brands and the International Finance Corporation (IFC) we launched our new supply chain climate change program aimed at promoting renewable and efficient energy consumption in our supply chain.
The use of more sustainable materials, such as BCI cotton (40%), bluesign polyester (46%) and FSC certified paper and cardboard (92%), was increased and the use of solvent-free polyurethane was piloted.

The implementation of third-party risk assessments and training our quality inspectors on how to identify serious occupational health and safety risks during factory visits was a major focus in 2017. The importance of this was highlighted by a tragic fatal accident at a PUMA supplier in January. A new PUMA anti-corruption policy was implemented and 99% of PUMA employees with email accounts worldwide, as well as over 300 PUMA suppliers, were trained on this issue. We also included an anti-corruption section in our supplier audit tool.

Although we are happy with the overall progress towards fulfilling our 10FOR20 Targets, we are conscious that there is still much to do if we are to achieve our ambitious goals and meet the challenges we constantly set ourselves.

Yours sincerely,

Lars Sørensen

Chief Operating Officer PUMA

FOREWORD

We have followed the GRI G4 framework in order to prepare this sustainability report and to ensure that we provide a high-quality disclosure. This report constitutes a combined non-financial report in accordance with sections 289b to 289e and 315b, 315c in conjunction with 289c to 289e of the German Commercial Code (HGB). We have provided separate reports for PUMA SE and the PUMA Group within the Governance and People at PUMA section only. Separate reporting of other sustainability data would not add any meaningful new information or value and would require significant additional resources.

Information about PUMA’s business model is set out in the Financial section of this Annual Report on pages 97–106.

For ease of understanding, each element of our sustainability strategy has been explained in a separate chapter containing the target, action plan and key performance indicators used to measure our progress towards achieving this target.

The Sustainable Development Goals (SDGs) from the United Nations define the global development priorities for 2030 and look to join efforts among business, governments and civil society around a defined set of targets. PUMA’s 10FOR20 Strategy supports the SDGs’ implementation in the regions where PUMA operates and where PUMA products are manufactured. Through out this sustainability chapter, we highlight which SDG(s) we support with our sustainability targets.

PUMA SUSTAINABILITY STRATEGY 10FOR20

INTRODUCTION

In 2016, we published the new PUMA 10FOR20 Sustainability Strategy, including a broad range of company targets to cover the five-year period up to 2020. These targets cover all aspects of our sustainability strategy.

The PUMA board decided to include key indicators of our performance on climate change, governance, human rights and health and safety in annual bonus calculations for the entire PUMA management team.*

The 10FOR20 Targets are also directly linked to the three significant sustainability-related risks identified in our due diligence process:

Potential human rights violations or incidents in our supply chain (Tier-1 and Tier-2 **)
Potential incidents of environmental pollution in our supply chain (Tier-1 or Tier-2)
Potential non-compliance with chemical regulations during production (Tier-1 or Tier-2).

How we address and mitigate these risks is described in the individual chapters of this report.

* All PUMA staff worldwide reporting directly to the board
** T1 Manufacturers of PUMA products; T2 Manufacturers of Materials and Components

In 2017, we focused on the implementation of our 10FOR20 Sustainability Targets via the 10FOR20 Action Plan and reported progress at our Executive Corporate Sustainability Committee meetings as well as during our 14th annual stakeholder meeting, which was held in Hong Kong for the first time.

During the discussions in Hong Kong we received feedback on our sustainability strategy, particularly from our Asian stakeholders. We discussed potential new initiatives with a view to measuring and implementing fair wages and fighting climate change in the supply chain, as well as expanding our Human Rights Due Diligence process beyond the first and second tiers of the supply chain.

For the first time, we invited other leading brands to take part in this event and we have now launched an industry working group focusing on promoting energy efficiency and renewable energy in shared factories. We also decided to expand our Supplier Climate Change Program from Vietnam to Bangladesh, in partnership with IFC. The PUMA Sustainability Management System supports the implementation of our strategy and is comprised of the following elements:

I. Organizational structure with clear reporting lines

II. Training for all PUMA staff

III. The PUMA Code of Conduct

IV. The PUMA Sustainability Handbooks

V. External databases for the collection of social, environmental, health and safety and governance information.

SCOPE OF DATA COLLECTION

Our materiality analysis clearly indicated that a major part of our impact comes from manufacturing materials and components and not the assembly of finished goods. We therefore added our core component and materials suppliers to the scope of our data collection.

DATA SOURCES

To ensure a high degree of transparency and to promote the sharing of environmental and social data with our industry peers, we have chosen to work with external and often public databases, including:

The Fair Factories Clearinghouse to share compliance audit data with other brands.
The ZDHC’s wastewater platform for sharing supplier data on wastewater testing.
The Chinese NGO IPE for the publication of supplier environmental data, including IPE’s Green Supply Chain Map.

We also collect social and environmental performance data from our company’s own sites and from our core suppliers engaged in manufacturing our products.

STAKEHOLDER ENGAGEMENT 3 (10FOR20 TARGET NO. 1)

Target Description:

Continue and expand PUMA’s Stakeholder Dialogue and Public Non-Financial Reporting in accordance with global standards; Increase sustainability communication towards consumers. Relevant to United Nations Sustainable Development Goal 17.

Example from the 10FOR20 Action Plan:

Conduct regional stakeholder mapping
Transform regional supplier round table meetings into regional stakeholder meetings

KPIs:

Thematic and regional coverage of partnership initiatives
Percentage of suppliers reached via round table meetings

PUMA continues to place a strong emphasis on stakeholder dialogue and industry collaboration. Therefore, the PUMA sustainability team works with a number of national and international programs and engages extensively with stakeholders and experts at a regional and international level.

3 G4-18, G4-24, G4-25, G4-26, G4-27

In addition, we partner with relevant organizations regarding specific materials, such as bluesign Technologies, the Leather Working Group, the Better Cotton Initiative, the Forest Stewardship Council and the German Partnership for Sustainable Textiles. Our global initiatives are supported by regional partnerships with organizations such as the Bangladesh Accord on Fire and Building Safety, the Indonesia Protocol on Freedom of Association and the Chinese National Textile and Apparel Council. Another example of local action is our work with the UNHCR on promoting legal employment for Syrian refugees in Turkey. Lastly, we are active members of the World Federation of the Sporting Goods Industry as well as the European Sporting Goods Industry Federation.

Our active stakeholder engagement at corporate level includes our first stakeholder meeting discussions in Hong Kong and our regional supplier round table meetings. The regional round table meetings in 2017 each had input from civil society organizations and external sustainability experts.

In line with our 10FOR20 Action Plan target, 302 suppliers (72%) attended the annual round table meetings and discussed relevant legal updates, the industry move towards convergence of sustainability tools and PUMA’s sustainability strategy.

For more information on our stakeholder engagement please visit: http://about.PUMA.com/en/sustainability/stakeholders

Interested organizations and individuals can also register for our stakeholder distribution list by sending an email to sustainability.stakeholders@PUMA.com

MATERIAL ASPECTS 4

As the most relevant sustainability challenges and opportunities in our industry are well-known and not necessarily specific to PUMA, we used the results of our existing materiality analysis when setting our 10FOR20 Targets to cover all sustainability-related material aspects.

4 G4-18, G4-19, G4-20, G4-21, G4-22, G4-24, G4-25, G4-26, G4-27

Our most material aspects are covered by our 10FOR20 Sustainability Targets:

Moreover, we also covered the more business-related material aspects within our Forever Faster brand positioning:

SOCIAL ASPECTS

HUMAN RIGHTS (10FOR20 TARGET NO. 2)

Zielbeschreibung:

Embed Human Rights across our operations and suppliers. Positively impact the communities where PUMA is present. Relevant to United Nations Sustainable Development Goals 3, 4, 5, 10.

Examples from the 10FOR20 Action Plan:

Identify human rights hotspots in the supply chain
Mitigate the risk of forced/bonded labor
Promote the empowerment of women

KPIs:

Number of zero tolerance issues not dealt with at year end (shared KPI with Social Compliance)
Number of employee hours spent on community engagement (shared KPI with Human Resources )

The respect for human rights has been at the heart of our sustainability strategy since it was first drafted more than 15 years ago. Today our engagement covers our own company sites and extends to our supply chain, forming a key principle of the PUMA Code of Conduct.

We report on code compliance at our supplier factories in the Social Compliance chapter. Positive community impacts are reported in the Human Resources section of this report.

This chapter focuses on the results of the Supply Chain Human Rights Risk Assessment conducted in 2017 with the specialist consultancy firm twentyfifty.

In 2017, we expanded our human rights risk assessment to the supply chain and took steps to mitigate the risks identified, for example in the area of cotton farming via our membership of the Better Cotton Initiative.

Based on the Human Rights Capacity Diagnostic (HRCD) developed by twentyfifty we have assessed our capacity to apply the human rights due diligence concept to our supply chain operations and to identify hotspots where further action is required.

The results show that PUMA is pro-actively embedding responsible business conduct in its management processes as well as collaborating with other peers and industry initiatives. On the other hand, practices regarding mapping and assessing risks and impacts in the lower tiers of the supply chain are still reactive and need to be better integrated at the strategic level.

Our social compliance program helps us to cover the first tier of the supply chain as well as core Tier 2 suppliers. We identified high risk areas in the field of cotton farming and cattle ranching as well as several blind spots, for example at ginneries, the lower tiers of leather tanning and marine shipping.

We discussed the results of our risk assessment with internal and external stakeholders and set up an action plan to mitigate the potential risk identified. It should be noted that these risks are endemic to these industries and will not be eliminated by the actions of a single brand.

In June 2017, we published our first PUMA Statement on Slavery and Human Trafficking, in accordance with the UK Modern Slavery Act.

In terms of capacity-building we launched a new women’s empowerment program, working with our global partner ILO Better Work at two key suppliers in Bangladesh.

Our PUMA Human Rights Action Plan is available on our website and we welcome stakeholder feedback via: sustainability.stakeholders@PUMA.com

SOCIAL COMPLIANCE (10FOR20 TARGET NO. 3)

Target Description:

Compliance with industry standards/ILO Core Conventions for all core suppliers, including suppliers of finished goods as well as component and material suppliers. Relevant to United Nations Sustainable Development Goals 3, 5, 8, 10.

Examples from the 10FOR20 Action Plan:

Align compliance assessments at industry level
Measure and manage social KPIs (supply chain)
Disclose full core supplier list and audit tool

KPIs:

Number of zero tolerance issues not dealt with at year end
Percentage of worker complaints resolved

PUMA has provided its own Code of Conduct for suppliers since 1993. A team of local experts in all major sourcing regions monitor the implementation of the code via audits, site visits and capacity-building projects. The code’s provisions are set out in our PUMA Sustainability Handbooks. Our code includes local contacts’ details to enable factory employees to reach the PUMA team directly in case of any code violations.

Since 2007, our internal vendor compliance system has externally accredited by the Fair Labor Association (FLA). Third parties are entitled to file official complaints with the FLA if they feel that there has been a breach of the code.

In 2016, we divided our supplier base into core suppliers, who are responsible for 80% of our business volume and non-core suppliers, who may be used on a less frequent basis and are responsible for less order volume.

We tasked our own Supply Chain Sustainability Team in 2017 to work with our core suppliers primarily (including material and component Suppliers) while outsourcing the auditing of Non-core suppliers local compliance experts. However, any new supplier must undergo an initial compliance audit by a member of the PUMA team.

All PUMA audits are openly shared with members of the Fair Factories Clearinghouse Platform and 27% of all audits are based on shared assessments.

“AS A FLA PARTICIPATING COMPANY WITH AN ACCREDITED SOCIAL COMPLIANCE PROGRAM, PUMA HAS DEMONSTRATED AN UNDERSTANDING OF HOW HEADQUARTER-LEVEL DECISIONS AFFECT FACTORY-FLOOR WORKING CONDITIONS AND HAS COMMITTED TO ENACTING FAIR LABOR PRACTICES IN ITS SUPPLY CHAIN. THE FLA IS PLEASED TO BE PARTNERING WITH PUMA AND OTHER COMPANIES SOURCING CLOTHING FROM TURKEY TO MAP COTTON SUPPLY CHAINS AND DEVELOP SYSTEMS FOR IMPROVING THE LIVES OF WORKERS SUPPLYING RAW MATERIALS. PROGRAMS THAT RESPECT LABOR RIGHTS FROM FARM TO FACTORY LEAD THE WAY TOWARD HIGHER STANDARDS FOR THE APPAREL INDUSTRY AT LARGE.”

Sharon WaxmanFair Labor Association, President and CEO

We are convinced that a standard compliance reference shared throughout the industry will lead to improvements and greater transparency. This is why we piloted the assessment tool developed by the SAC’s Social and Labor Convergence Program along with several other brands.

Our core factories clearly outperform the non-core factories in terms of audit ratings. 74% of all core Tier 1 suppliers achieved an A or B+ rating and only one core Tier 1 factory failed our audit with a C grade.

In comparison, only 60% of our non-core Tier 1 suppliers achieved an A or B+ rating and 10 of our active non-core Tier 1 suppliers (4%) failed the audit and will need to improve their standards or face being delisted.

In total, 10 factories were not admitted into our supplier base due to a failed audit and a further 7 factories were deactivated for the same reason.

Overall, our supply chain team identified four cases of zero tolerance issues in 2017. These cases were mainly related to the underpayment of minimum wages. All factories were asked to immediately remedy the issues in question.

Two factories were consequently removed from our supplier base and two factories rectified the payments and therefore remained active PUMA suppliers.

Please find below an overview of the 81 worker complaints and 8 third-party complaints received in 2017:

Since any audit or assessment can only analyze the compliance situation at a given time, we used two other tools to manage and track performance of our suppliers:

a worker complaints hotline for all PUMA suppliers,
the collection of social KPIs from our core suppliers.

The number of worker complaints received (81) by our team increased slightly, with a more even geographical distribution of complaints. Three worker complaints were classified as zero tolerance issues and were successfully resolved. The overall resolution rate of workers complaints remained stable, above 90% for the third consecutive year. The prevailing causes of complaints included wages, employment relationship and working hours, as well as dignity and respect in the workplace. Our team is committed to resolving each individual case by following up closely with the relevant parties until a satisfactory solution is reached.

In addition, we received ten third-party factory complaints covering 17 issues. The third party complaints focused mainly on freedom of association, fair compensation and dignity and respect. All third-party complaints were followed up and closed either through resolution or by providing a detailed explanation to the complaining organization.

Worker complaints and social KPIs help us and our suppliers to track performance improvements over time and to measure suppliers against benchmarks.

The second year of our S-KPI data collection confirmed the trends already visible in 2016:

Our suppliers pay significantly above the minimum wage. On average, basic wages are 26% higher. When overtime and bonuses are added, the average premium is 87%;
Good global coverage of social insurance (except China);
Only a minority of our suppliers have collective bargaining agreements in place;
There are low proportions of permanent workers and high staff turnover rates in several countries, most notably Cambodia, China and Mexico.

We recognize the persistent, systemic challenges in the supply chains of the apparel and footwear industry in many major sourcing countries. This year we are responding to these challenges as below:

Weak enforcement of labor law and social insurance provisions by local authorities;
-> Start social insurance promotion program for our Chinese supplier base (2017).
Low minimum wage levels leading to incentives for excessive overtime;
-> Regular monitoring of wage rates in our factories in comparison to minimum wages.
Immature industrial relations leading to anti-union bias among many employers;
-> Freedom of association training for factory management (2018).
Inadequate local infrastructure, such as public transport systems;
-> Membership of the Cambodia Road Safety Initiative (2017).

Cultural differences on the definition of good governance;
-> Anti-corruption policy as part of PUMA sourcing contracts, anti-corruption training program for suppliers, inclusion of an anti-corruption section in the PUMA audit tool (all 2017).

The choice we are facing is whether to withdraw from certain otherwise attractive sourcing markets to avoid these systemic challenges or to stay engaged. We have chosen to engage and thus try to improve the situation for the workers in our supplier factories, securing much-needed local jobs and supporting economic development in developing regions.

There is no quick fix for these challenges. Our strategy of joint action with our industry peers in multi-stakeholder initiatives and with intergovernmental organizations such as the ILO, will bring gradual improvements over time, something which was also part of the development of most developed countries. For example, in 2017, together with other brands, we met a representative of the Cambodian government to discuss the need to continue the implementation of the ILO Core Conventions in the country. Initiatives like the German Partnership for Textiles have the potential to further support and accelerate this process.

HIGHLIGHT: PUMA HAS BEEN AN ACCREDITED MEMBER OF THE FAIR LABOR ASSOCIATION SINCE 2007.

PUMA Vendor Financing Program

In a bid to continue our efforts to provide an incentive to suppliers with good compliance and sustainability ratings, the IFC and BNP Paribas have offered attractive financing conditions for vendors who have achieved a SAFE A or B rating. In 2017, twelve additional suppliers from six countries joined the program.

“GLOBAL TRADE SUPPLIER FINANCE (GTSF) IMPROVES ACCESS TO FINANCE IN PARTICULAR FOR SMES AND CREATES A POWERFUL FINANCIAL INCENTIVE FOR SUPPLIERS TO INVEST IN BETTER ENVIRONMENTAL AND SOCIAL CONDITIONS. WE ARE GLAD TO SEE PUMA SUPPLIERS FROM CAMBODIA, VIETNAM AND CHINA JOINING THE PROGRAM AND STRIVING FOR SUSTAINABILITY. THIS IFC-PUMA PARTNERSHIP LEADS THE WAY FOR THE INDUSTRY TO FOLLOW IN FORGING CLOSER LINKS BETWEEN FINANCE AND SUSTAINABILITY.”

ETHIOPIS TAFARAIFC, Vice President und General Counsel

HEALTH AND SAFETY (10FOR20 TARGET NO. 4)

Target Description:

Zero fatal accidents at PUMA and its suppliers; average injury rate for suppliers below 2 (interim target 2017), below 1.5 for PUMA. Relevant to the United Nations Sustainable Development Goal 3.

Examples from the 10FOR20 Action Plan:

Expand building safety projects to India and Pakistan
Ensure professional risk assessments are conducted regularly

KPIs:

Number of fatal accidents at Tier 1 and core Tier 2 factories
Average injury rate at PUMA (reported in People at PUMA section)
Average injury rate at core Tier 1 suppliers

PUMA actively promotes the health and safety of its workforce. For details on our corporate OHS performance, please refer to the People@PUMA section of this report.

LOWLIGHT: WE MISSED OUR ZERO FATAL ACCIDENTS TARGET IN 2017

Sadly, we missed our zero fatal accidents target in 2017; in a tragic accident at one of our Bangladeshi suppliers, a worker fell into a wastewater treatment basin during sampling and could not be rescued.

This tragic event led us to accelerate our Zero Fatal Accidents Project. In 2017, we trained our entire global sustainability team in how to conduct a professional risk assessment. Our team then, in turn, trained 130 suppliers on the issue. In addition, our quality inspectors, who regularly visit our suppliers, were trained in how to identify potentially dangerous situations at factory level.

We successfully collected risk assessments from 99% of our core T1 suppliers and plan to expand this work in 2018.

We also identified road accidents as another potential source of fatal accidents and continued to engage with other brands in Cambodia through a working group in order to improve road safety for commuting employees.

The injury rates for Bangladesh (0.7), China (0.5) and Vietnam (0.4) reported for our core Tier 1 suppliers in our three largest sourcing countries reduced compared to our first data collection in 2016 and were below our target rate.

Building Safety

In 2016, the Accord on Fire and Building Safety in Bangladesh continued working to prevent fires, building collapses and other accidents. PUMA factories were more effective in remedying their issues (96%) than the accord average (82%). Fire remedy progress was particularly faster (98%) than the accord average (80%).

We also expanded our building safety efforts in Pakistan and India. In the first half of 2017, we completed our Pakistan project when four supplier factories in Pakistan underwent professional building safety assessments covering electrical fire and structural safety. This effort was followed up with five further building safety assessments in India.

ENVIRONMENT

CLIMATE CHANGE (10FOR20 TARGET NO. 5)

Target Description:

Science-based CO2 reduction target to be developed (2016) and implemented (2020). Relevant to United Nations Sustainable Development Goal 13.

Interim Target:

Relative reduction of Scope 1, 2 and 3 CO2 emissions by 3% per year

Examples from the 10FOR20 Action Plan:

Extend large scale climate change projects in supply chain
Work with logistics service providers to lower carbon footprint from transportation of goods

KPIs:

Direct CO2 emissions from own entities (Scope 1)
Indirect CO2 emissions from own entities (Scope 2)
Indirect CO2 emissions from manufacturing and transport of goods (Scope 3)

During the UN Climate Change conference in Paris in 2015, PUMA committed to setting a science-based CO2 emission target (SBT). This means that we have accepted our fair share of global efforts to limit temperature rises to a maximum of two degrees. We are currently working with the WWF and the World Resources Institute to determine our science-based targets. Once validated, they will be incorporated into our action plans on climate change.

In the meantime, we retained our interim target of 3% relative reductions in our direct and indirect emissions per year. In the preparation for the 2017 UN Climate Change Conference in Bonn, PUMA supported an initiative by Stiftung 2 Grad to put climate change back at the top of the political agenda in Germany. In parallel, we started an industry working group on reducing CO2 emissions in our supply chain, with its first meeting taking place during our annual stakeholder meeting discussions in Hong Kong.

Due to a significant per-item reduction of CO2 emissions from the manufacturing of our goods, we reduced our Scope 3 emissions by 7% relative to turnover. Our Scope 1 and 2 emissions were reduced by 5% relative to turnover, thus exceeding our target of 3% relative reduction per year. In absolute terms, our CO2 emissions across all three Scopes increased by 6%.

Although global shipment volumes increased by around 33%, the increase in transport-related CO2 emissions was only 31%. Our main partner for sea freight shipments, Maersk Line, operates ships with lower fuel consumption than the industry average, which is reflected in the emissions data they provide.

In 2017, we started the Vietnam Improvement Program (VIP) in partnership with the International Finance Corporation as well as several other larger brands. It contains detailed energy efficiency assessments, as well as feasibility studies for implementing renewable energy projects at supplier level. The PUMA part of the program focuses on eight PUMA core suppliers with large-scale energy consumption and CO2 footprints.

To improve the climate performance of our offices, stores and warehouses, we have reached out to the senior management of our largest subsidiaries and asked them to draw up individual climate action plans by country. These action plans are currently in preparation. To support more frequent carbon reporting, we have expanded services provided by the energy consultancy NUS, which will now cover all PUMA sites in China, Russia and India. Together with the existing NUS services in the United States, Germany, Italy, Sweden and France, we will soon be able to receive quarterly CO2 emission reports covering over 50% of our direct and indirect (Scope 1 and 2) emissions.

We successfully piloted the usage of plug-in hybrid cars in our car fleet and plan to incentivize the use of hybrid cars going forward with a new car fleet policy in 2018. This move will be supported by the opening of six additional electric charging stations at our company headquarters in Germany.

In terms of renewable electricity procurement, our German and Italian offices, stores and warehouses as well as selected sites in Australia and the UK run entirely on renewable electricity. During 2017, Spain joined the list of countries using predominantly renewable electricity.

HIGHLIGHT: SINCE 2010 ALL PUMA SCOPE 1 AND 2 EMISSIONS HAVE BEEN OFFSET ON AN ANNUAL BASIS.

“HERE AT PUMA SOUTHERN EUROPE, WE AIM TO KEEP MAKING CONSTANT STEPS TO BECOME MORE SUSTAINABLE. THIS YEAR IN SPAIN WE SWITCHED TO AN ELECTRICITY SUPPLIER WHICH PROVIDES 100% RENEWABLE ENERGY FOR ALL OUR STORES AND OUR HEADQUARTERS IN BARCELONA AT NO ADDITIONAL COST TO THE COMPANY. THIS WILL HELP US TO REDUCE OUR ENVIRONMENTAL IMPACT.”

Javier OrtegaJavier Ortega, GM PUMA Southern Europe

CHEMICALS (10FOR20 TARGET NO. 6)

Target Description:

Zero discharge of hazardous chemicals from our supply chain by 2020. Relevant to Sustainable United Nations Development Goals 3 and 6.

Examples from the 10FOR20 Action Plan:

Reduce the percentage of RSL failures to below 3%
Phase-out the use of Poly-Fluorinated Chemicals (PFCs)
Explore alternatives for VOCs in adhesives and PU materials

KPIs:

Number and pass rate of RSL tests
Percentage of products free of PFC
VOC Index for shoes

All products commercialized by PUMA are subjected to the Restricted Substance List (RSL), to ensure compliance with global chemicals regulations. We also have a communications protocol in place to inform the management board in the event of any major failures on a product level (none in 2017).

We use the Product Restricted Substance List developed by the AFIRM Group and the Manufacturing RSL developed by the ZDHC rather than our own PUMA testing standards. In 2018, we will pilot the ZDHC’s Chemicals Gateway for automated review of MRSL compliance at supplier level.

In 2017, we piloted the new Higg Index Facilities Environmental Module (FEM) from the SAC. The tool was launched in November 2017 and we plan to roll it out to all our core suppliers in 2018.

During 2017, nine of our core materials suppliers were bluesign system partners and 15 leather suppliers were medal-rated members of the Leather Working Group.

In the period between 2015 and 2017, we were able to almost double the number of RSL tests at the same time as reducing the rate of reported test failures from 7.7 to 2.2% in line with our target of reducing our RSL failure rate to below 3%. When failures were found in RSL tests, we worked with our suppliers to identify the root cause and to eliminate any contamination before the material was approved for PUMA production.

In addition, our material teams continued to work on the elimination of Perfluorinated Chemicals (PFCs) used in water repellent finishes, in line with our target to phase out the use of PFCs.

HIGHLIGHT: AS OF THE END OF 2017, 99% OF OUR MATERIALS ARE PFC-FREE ACROSS ALL THREE MAJOR PRODUCT CATEGORIES (APPAREL, FOOTWEAR AND ACCESSORIES).

The remaining 1% consist of exceptional cases where the oil-repellent properties of PFCs are still required, for example for the outfits supplied to our Formula One teams.

Another chemical that came into focus last year was dimethylformamide (DMFa). DMFa is widely used in the production of polyurethane materials and coatings and can therefore be found within the PUMA supply chain. We have started to look into alternative PU solutions and piloted a DMFa-free PU shoe in 2017.

We also continued to work on our long term strategic target of reducing the amount of VOCs used in footwear production. We were able to lower this amount value to below 21 g/pair in 2017. Our next interim target will be 20 g/pair.

WATER&AIR (10FOR20 TARGET NO. 7)

Target Description:

Industry best practice for water consumption and effluent treatment is met by 90% of PUMA core suppliers with wet processing facilities. Industry best practice for air pollution is met by 90% of PUMA core suppliers. Relevant to United Nations Sustainable Development Goals 3 and 6.

Examples from the 10FOR20 Action Plan:

Ensure regular wastewater testing at relevant suppliers
Support the development and adoption of an industry wastewater standard
Support the development of an industry air quality standard

KPIs:

Percentage of core suppliers with wet processing covered
Percentage of core suppliers meeting best practice standards for water (Best practice for air still to be defined)

The textile industry has been highlighted as a major source of water pollution by several NGO reports in recent years. In 2016, the ZDHC developed an industry-aligned wastewater guideline, which serves as a unified and global standard for the apparel and footwear industry regarding wastewater quality at suppliers with wet-processing facilities.

At PUMA, we piloted the ZDHC wastewater guidelines in early 2017 and rolled out the guidelines during the year to our core suppliers with wet-processing facilities (typically dyeing mills and tanneries or vertically integrated suppliers).

HIGHLIGHT: IN 2017, PUMA ROLLED OUT THE dZDHC WASTEWATER GUIDELINES TO 96% OF CORE SUPPLIERS WITH WET-PROCESSING FACILITIES

42 PUMA suppliers tested their wastewater in 2017, leading to 54 test reports being uploaded on the ZDHC platform. The reports came from factories located in Bangladesh, China, Indonesia, Thailand, Turkey, Taiwan and Vietnam. In total, the ZDHC wastewater guideline now covers 96% of our core suppliers with wet processing facilities.

Overall, 78% of all test reports received were in full compliance with the MRSL requirements and the heavy metal requirements in the ZDHC wastewater guidelines. For conventional wastewater requirements the compliance rate was only 48%, showing a clear need to improve the performance of half of the wastewater treatment plants in our supply chain.

“AS AN ACTIVE PLAYER IN BOTH THE SPORTS AND TEXTILE INDUSTRY, PUMA HAS BEEN WORKING STEADILY ON ENSURING ITS CHINESE SUPPLIERS ARE IN COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS IN CHINA. THIS YEAR, WE ARE GLAD TO SEE THAT PUMA ALSO JOINED FORCE WITH FIVE OTHER BRANDS TO PROMOTE TRANSPARENCY ALONG ITS SUPPLY CHAIN IN CHINA. WE TRUST THAT THIS COMMITMENT FROM PUMA, ALONG WITH PUMA’S UPTAKE OF DIGITAL SOLUTIONS TO TAP INTO PUBLIC ENVIRONMENTAL BIG DATA, WILL CONTINUE TO DRIVE GREEN TRANSFORMATION FOR THE TEXTILE INDUSTRY AND FACILITATE CONSUMERS TO MAKE A GREENER CHOICE.”

Ma JunIPE CHINA, FOUNDER

We will work with our suppliers and the ZDHC to improve these figures going forward and have set ourselves a target of 90% compliance for MRSL and heavy metal requirements as well as 70% compliance for conventional requirements in 2018. We also plan to expand the reach of our wastewater testing to India and the Americas region.

In addition to our work on wastewater, we carried out a desktop study on air pollution covering our Chinese core supplier base. As a next step, we will support the completion of a ZDHC-based air pollution study with the aim of publishing industry-based ZDHC air pollution guidelines similar to those for wastewater quality. This will enable us to define an industry-aligned KPI for air pollution going forward.

MATERIALS (10FOR20 TARGET NO. 8)

Target Description:

Use sustainable material alternatives for PUMA’s key materials: cotton, polyester, leather, polyurethane and cardboard. Relevant to United Nations Sustainable Development Goals 12 and 15.

Examples from the 10FOR20 Action Plan:

Increase bluesign certified polyester usage to 50% by 2020
Increase Better Cotton Initiative fiber volume to 50% by 2020
Increase the usage of FSC certified and/or recycled paper and cardboard to 90% by 2020
Keep the percentage of leather from LWG medal-rated tanneries above 90%
Explore the use of water-based polyurethane

KPIs:

Percentage figures for each material

Life cycle studies and the Environmental Profit and Loss Account show that the majority of the environmental impact from our products occurs during the raw material creation and processing phases. The data on social impact is less complete. Exposure of hotspots such as child labor in cotton farming or forced labor practices during cattle ranching indicate that the raw material stage has also a very significant social impact.

We have set volume targets for our main materials (cotton, polyester, leather and cardboard). In addition to these materials, we are also looking to phase out hazardous solvents in the production of polyurethane. However, we need to conduct further research before a percentage target for PU can be set. We feel that an industry-wide approach would be most effective.

HIGHLIGHT: 100% OF LEATHER USED IN ASIA IS MADE BY LEATHER WORKING GROUP MEDAL-RATED TANNERIES.

The percentage of recycled and/or FSC certified paper and cardboard rebounded to 95% after a temporary decline in 2016. This means we have already exceeded our 2020 target. Our major PUMA shoebox design, as well as our paper-based shopping bags and hang tags are FSC certified. In 2018 we will move towards obtaining FSC certification for our cardboard boxes for online purchases too. As for polyurethane, we have joined a working group on DMF-free PU in China and piloted a DMF-free PU shoe.

Table 11 above shows a significant increase in the use of BCI cotton and bluesign certified polyester for apparel, in line with our interim targets. Accessories also hit the interim target of 30% bluesign certified polyester. For footwear, we exceeded our LWG medal-rated leather target for 2020 for the third year in a row, in 2017.

EP&L IMPACT (10FOR20 TARGET NO. 9)

Target Description:

Continue to report on the EP&L every year under the auspices of KERING. Relevant to United Nations Sustainable Development Goals 7 and 12.

Examples from the 10FOR20 Action Plan:

Regularly publish updated PUMA EP&L data
Introduce industry-aligned product sustainability tools for design and development

KPI:

Annual EP&L Values PUMA

In line with our 10FOR20 Action Plan, in 2017 we published our PUMA EP&L for the first time since 2011. The results are now available on our website.

As part of our 10FOR20 Targets, we report on the specific progress PUMA has made towards gradually lowering the EP&L value relative to our financial revenue. We will do this by increasing the percentage of more sustainable raw materials used in our products and promoting resource-efficient practices in our supply chain.

The Environmental Profit and Loss Account (EP&L) analyzes the externalized environmental impact of PUMA in the categories air pollution, climate change, land use, waste as well as water and water pollution. In a second step, those negative environmental impacts are transferred into financial values. By doing so, we can identify the largest environmental impacts and work on their reduction.

Figures include PUMA owned or operated offices, warehouses and stores. Outsourced warehouses and franchised stores are excluded.
Includes paper consumption for office usage in offices, warehouses and stores, card board and paper bags consumption.
Data includes extrapolations or estimations where no real data could be provided.
Excludes on-site generated and consumed energy as well as energy produced on site and sold to the grid.
Includes own production sites in Argentina. All other production is outsourced to independent supplier factories.
Store data is derived from exemplary stores in each country and extrapolated to cover all stores; methodological changes over the last 3 years do influence results.
Increased scope (more sites covered) in 2017.

For an overview of the environmental KPIs of PUMA entities and its Core Tier 1 suppliers, please see table 12. Together with data on our material consumption and manufacturing locations, these figures form the basis of the PUMA EP&L.

The trend from our core Tier 1 suppliers shows an overall reduction of energy (except for apparel) and water consumption as well as CO2 emissions and waste. We attribute those reductions to the regular collection of environmental performance data and to resource efficiency programs being rolled out by various brands
including PUMA.

In order to better understand the impact of different types of materials, we have split the data into factories producing leather, synthetic leather, textiles or packaging. The results are shown in tables 16 to 18. For the first time we have added a weighted average, which allows us to trace the average KPI values over time going forward.

GOVERNANCE (10FOR20 TARGET NO. 10)

Target Description:

Maintain and run a state-of-the-art compliance management system (including anti-corruption measures). Relevant to United Nations Sustainable Development Goals 8 and 16.

Examples from the 10FOR20 Action Plan:

Increase participation rate for Kering’s ethics training
Introduce a PUMA anti-corruption policy

KPIs:

Percentage of PUMA employees trained in anti-corruption measures
Percentage of PUMA core suppliers trained in anti-corruption measures

PUMA’s compliance management system

As a global sports company, PUMA is active worldwide. We are aware of the financial risks and potential reputational damage that may result from non-compliance with laws and regulations by both our employees and business partners. The risk of compliance violations is present in all corporate functions and in all countries in which we conduct business. That is why PUMA maintains a compliance management system to prevent, detect, manage and monitor compliance risks at an early stage. The pillars of this system are described in detail in the company’s Corporate Governance Report. At PUMA, we have a zero-tolerance approach to bribery and corruption. Incidents reported to senior management are investigated immediately and thoroughly and the appropriate disciplinary steps are taken.

The highest-ranking governance body at PUMA in terms of sustainability is the Administrative Board of PUMA SE and its Sustainability Committee. The Sustainability Committee is responsible for the supervision of PUMA’s sustainability strategy. The Sustainability Committee convened once in 2017. The current members of the Sustainability Committee are: Jean-François Palus, Béatrice Lazat and Martin Köppel.

Anti-corruption measures

As a member of the UN Global Compact, PUMA is committed to fighting all forms of corruption, including extortion and bribery. The fight against corruption is not only one of the most important focal points of our internal compliance management system, but also a reoccurring issue in our dialogue with NGOs, e. g. at our annual stakeholder discussions and with our contractual partners, especially in procurement. Our commitment to fighting corruption is an important part of the Group-wide PUMA Code of Ethics and the PUMA Anti-Bribery and Anti-Corruption Policy, regular communication measures implemented by management and all compliance training courses and e-learning. Ensuring the participation of almost all PUMA Group employees with email accounts in anti-corruption training courses is a factor in calculating bonuses for all PUMA executives.

Employees are regularly familiarized with the rules of the Code of Ethics and the Group’s guidelines and are thus made aware of compliance regulations. In the 2017 financial year we again carried out e-learning training on the Code of Ethics, developed together with our major shareholder, throughout the Group. In 2017, this e-learning focused on the fight against corruption, workplace behavior and environmental protection. Additionally, in 2017 we rolled out an e-learning course on the subject of combating bribery and corruption. Both e-learning programs were mandatory for all employees. The campaigns were sponsored by the managing directors of PUMA SE, above all Bjørn Gulden, who promoted the e-learning to all PUMA employees. In 2017 99% of PUMA Group (PUMA SE 96%) employees with their own email accounts participated in the Code of Ethics e-learning, compared to 97% in 2016. The e-learning on anti-bribery and anti-corruption was completed by 98% of employees of the PUMA Group (PUMA SE 99%) with email accounts. In addition, special face-to-face training sessions were held on individual topics such as antitrust law, insider law and anti-corruption, raising awareness of the essential legal framework and internal company regulations.

HIGHLIGHTS: 99% OF ALL PUMA STAFF WITH EMAIL ACCOUNTS GLOBALLY COMPLETED OUR CODE OF ETHICS TRAINING AND 94% OF OUR CORE SUPPLIERS WERE TRAINED IN ANTI-CORRUPTION MEASURES

To emphasize PUMA’s commitment to the fight against corruption throughout the supply chain, we explicitly set out the principles of appropriate conduct in the PUMA Code of Conduct in 2016. The Code of Conduct sets out the minimum standards to which our partners in the supply chain must adhere (http://about.PUMA.com/en/sustainability/standards/coc). In 2017, we added anti-corruption clauses to our contracts with our suppliers on this basis. The clauses obligate our contractual partners to establish and further develop appropriate systems for fighting bribery and corruption in their respective companies. PUMA monitors compliance with these requirements within the scope of its annual SAFE audits. Anti-corruption was again addressed by PUMA in the context of all Supplier Round Tables in 2017. In 2017, we provided face-to-face training for 94% of all PUMA’s core suppliers and asked them to submit certificates from the UN Global Compact e-learning on the subject in order to raise awareness regarding the fight against corruption. We provided our suppliers with our guidelines for combating and preventing bribery and corruption in order to facilitate the introduction of appropriate internal standards.

SUMMARY

With the implementation of the UN Sustainable Development Goals as well as the UN Guiding Principles on Business and Human Rights and the corresponding legislation, more and more companies have realized that their sustainability efforts need to cover their full supply chains and not just their own entities or direct suppliers. This is an enormous task, one that can be met only if all the key players in our industry work together.

It is therefore no surprise that in 2017 several cross-brand initiatives on sustainability gained traction. Large-scale projects to harmonize social and environmental audit/assessment standards have completed their pilot phases and are now ready for adoption in 2018.

The same holds true for joint industry standards on input chemistry monitoring and wastewater quality. In addition, a growing number of apparel and footwear brands and retailers have committed to setting science-based climate change targets and several initiatives working toward fair living wages have emerged.

Over the next two years, the time will come to leave the pilot phases behind and start the widespread adoption of converged sustainability tools. In addition, we need to transition our industry from measuring numbers of audits, test reports or training sessions towards measuring the real impact on the ground. In order to do this, new technologies like online-metering and cell phone-based apps to collect (nearly) real-time information will play an important role.

The ability to move quickly to scale up our efforts and take on new challenges, such as the release of microplastics from synthetic apparel and still-unresolved issues like how to recycle apparel and footwear products at scale, will determine the extent to which the apparel and footwear industry will be able to transition to more sustainable business models.

PUMA stands ready to contribute its fair share to this transition.

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To our Shareholders

PublicisPixelparkAdmin — Thu, 25 Jan 2018 14:21:52 +0000

FOREWORD

DEAR SHAREHOLDERS OF PUMA,

2017 WAS A GREAT YEAR FOR US AT PUMA AND SHOWS THAT OUR HARD WORK IS STARTING TO ALSO SHOW FINANCIAL RESULTS. WE GREW OUR REVENUE BY 16% AND FOR THE FIRST TIME IN OUR HISTORY WE ACHIEVED SALES OF MORE THAN FOUR BILLION EURO. WE ALMOST DOUBLED OUR EBIT AND MORE THAN DOUBLED BOTH OUR NET EARNINGS AND CASH FLOW.

These results exceeded our initial expectations for the year and led us to adjust our guidance three times. We had a solid development geographically with double digit growth in all regions, and we are very proud that the growth was again led by very strong development in footwear, which grew 24%. We know that we still have a way to go as a brand before you as investors will be satisfied with us and that we must continue to show sustainable growth in both top and bottom lines. We feel that the improved sell-through results in stores and the continued positive feedback from our retail partners confirms we are on the right track and that our strategy, marketing and products are working.

We are committed to continuing to work hard and further invest to become the Fastest Sports Brand in the world and create value for retailers, improve performance for athletes, and excite consumers. This is the way we at PUMA can achieve the returns on investment that you, as our shareholder, deserve.

In January 2018, our majority shareholder, Kering S.A., announced plans to distribute parts of its PUMA shares to Kering’s shareholders (dividend in kind), thus reducing its stake in PUMA. This transaction is subject to approval at the Annual General Meeting of Kering S.A. in April 2018.

We at PUMA, welcome and fully support this proposal and we are very pleased that Kering has proposed this way of reducing its stake in our company. This transaction would lead to a much greater free float of PUMA shares providing investors with an enhanced possibility to invest in us, while also allowing us to continue with our current business strategy.

The strategy that we have executed over recent years and that is starting to show financial results would not have been possible without the support of Kering as the majority shareholder. Based on PUMA’s positive business development in 2017, with a significant improvement of profitability and cash flow, we, the Managing Directors and the Administrative Board, will propose a one-off total dividend of €12.50 per share for the 2017 financial year to you as our shareholders at the Annual General Meeting.

In 2017, we continued to focus on our five priorities: increasing brand heat, a competitive product range, a leading offer for women, improving the quality of distribution and organizational speed.

We continued to invest heavily in marketing to drive brand heat. The vast majority of our marketing expenses continued to be focused on sports performance partnerships, including those with the world’s fastest athletes Usain Bolt and Andre De Grasse, star footballers like Antoine Griezmann and Sergio Agüero, world-class golfers Lexi Thompson and Rickie Fowler, football federations like Italy, Switzerland and Uruguay, football clubs like Arsenal FC, Borussia Dortmund and Chivas, the Jamaican and Cuban Olympic Federations and many others. In 2018, we will also welcome new partners with Olympique de Marseille, Borussia Mönchengladbach and A.C. Milan to our PUMA family.

Our marketing team has also focused on working with cultural, music and fashion icons to connect with young trend-setting audiences. We see that storytelling with these influencers, especially through social media, has become a very powerful brand asset. This has created a lot of brand heat and made PUMA one of the hottest sports and lifestyle brands for young consumers. In 2017, PUMA has further built on this success, partnering with global stars such as Rihanna, Cara Delevingne, The Weeknd, Big Sean, and most recently Lewis Hamilton and Selena Gomez. Our marketing team winning the Marketer of the Year Award 2017 from Footwear News Magazine in the United States shows that our innovative work is being acknowledged.

On the product side, we launched two completely new football footwear franchises, PUMA ONE and PUMA FUTURE. Both have been well-received by our retail partners and shown very good initial sell-through results. We also continued to place strong emphasis on innovations, such as our proprietary customizable lacing system NETFIT and our brand-new JAMMING midsole technology, whose NRGY beads provide high comfort and high energy return. In Golf we launched our COBRA Golf KING F7 & F7+ smart drivers, with embedded sensors, allowing golfers to automatically track the distance and accuracy of each drive.

Over recent years, PUMA has renewed its focus on the Women’s segment. With our unique heritage and our new 360° approach where the gym meets the runway, we have again been able to generate overproportionate growth in the Women’s segment in 2017. Together with powerful ambassadors like Cara Delevingne and the New York City Ballet, we continued our DO YOU campaign, which aims to inspire confidence in women around the world. Our Women’s Creative Director, Rihanna, again presented two strong seasonal collections of her FENTY PUMA by Rihanna line, in highly anticipated shows at the Paris and New York Fashion Weeks. And just recently, singer, actress and producer Selena Gomez presented the PHENOM and EN POINTE fitness footwear and apparel lines, and received great media echo and promising sales results in retail.

PUMA has continued to improve the quality of its distribution and expanded its presence in key Sports Performance and Sportstyle accounts around the world. We have further strengthened our relationships with key retailers and are doing everything we can to be a reliable and positive partner for their businesses. It is our clear objective to create win-win situations for both our partners and ourselves, enabling retailers to make money with our products. Through improved sell-through, PUMA gained more shelf space in retail stores during 2017. Furthermore, we continued to upgrade our owned-and-operated retail store network with further openings of new stores and refurbishments of existing stores. We relaunched our eCommerce presence www.PUMA.com to create a more modern and mobile-first format, which initially went live in Europe in June. This platform will be rolled out to the other regions during 2018 and 2019.

We have continued to speed up our operational processes and systems by further enhancing PUMA’s International Trading Organization, the roll-out of new product development systems, further standardization of ERP systems and improvements to the overall IT infrastructure. We have also continued to invest in our infrastructure and have seen new modern offices being opened in 2017 in Hong Kong and Milan and in April 2018 we will open the extension of our headquarters in Herzogenaurach, Germany.

Social, economic and environmental sustainability remain core values for PUMA. As a long-term signatory to the United Nations Global Compact we have linked our sustainability strategy to the United Nations Sustainable Development Goals. Half way through our 10FOR20 Sustainability Targets, we are well on track to create positive impact through industry collaboration and selected partnerships with leading sustainability initiatives. In 2017, we used 40% cotton from the Better Cotton Initiative and 46% bluesign certified polyester in our products. 99% of our leather was supplied by Leather Working Group medal rated tanneries and 92% of our paper and cardboard was FSC certified.

In the field of human rights and social compliance, we increased the percentage of shared audit assessments to 27% and piloted a harmonized industry assessment tool which will help to reduce duplicative audits by individual brands, thus saving time and resources that can be spent more efficiently to drive positive change. The increase in shared assessments allowed us to expand our compliance program deeper into the supply chain where we now also cover our core material and component suppliers.

Our employees supported our efforts to create positive impact where PUMA operates and spent 17,500 hours on community engagement.

PUMA’s improved performance in 2017 is the direct result of the great work and effort of our people at PUMA. I am proud to work with such a talented and dedicated team. I feel we are a great family! I would like to use this opportunity to express my sincerest thanks to everyone on the PUMA team! I would also like to thank you, our shareholders, for your support. You have stood by us, even in more difficult times, when the results were disappointing. I assure you that we will continue to work very hard in 2018 and beyond, to deliver good returns on your investment. With a powerful momentum, reignited brand heat and strong products, I am confident that 2018 will be another great year for PUMA.

Bjørn Gulden
Chief Executive Officer PUMA

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