Puma posts strong sales growth but warns of coronavirus hit

Puma Se said that the company’s fourth quarter sales increased by 20.6 percent reported and 18.3 percent currency adjusted to 1,478.6 million euros (1,596.5 million dollars) with all regions and all product divisions contributing in double-digit increases. The company said in a statement that Sportstyle, running and training as well as Motorsport were the categories with the highest growth rates. The gross profit margin improved to 47.3 percent in the fourth quarter, while the operating result (EBIT) increased by 46.8 percent to 55.2 million euros (59.6 million dollars). Net earnings increased by 55 percent to 17.8 million euros (19.2 million dollars) and earnings per share rose to 0.12 euros.

Commenting on the company’s performance, Bjørn Gulden, Chief Executive Officer of Puma SE said: “2019 ended with a very strong fourth quarter for us. After a good start into 2020, February has of course been negatively affected by the outbreak of COVID-19. The business in China is currently heavily impacted due to the restrictions and safety measures implemented by the authorities. Business in other markets, especially in Asia, is suffering from lower numbers of Chinese tourists. Given the current uncertainty around the virus it is of course impossible to forecast its impact on the business.”

Puma’s full year sales increase 18.4 percent

Puma’s sales in 2019 increased by 18.4 percent reported and 16.7 percent currency adjusted to 5,502 million euros (5,940 million dollars). The company said, in the EMEA region, sales rose by 11.2 percent reported and currency adjusted to 2,001.4 million euros (2,160.8 million dollars) driven by growth in Germany, Spain, Russia, and Turkey.

In the Americas region, sales increased by 20.6 percent reported and 17.9 percent currency adjusted to 1,944 million euros (2,099 million dollars) with both North America and Latin America contributing with double-digit growth rates. The Asia/Pacific region delivered the strongest sales growth of 26 percent reported and 22.8 percent currency adjusted to 1,556.9 million euros (1,680.9 million dollars), driven by China and India.

In the footwear division, sales increased by 16.8 percent reported and 15.6 percent currency adjusted to 2,552.5 million euros (2,756 million dollars), with strongest growth achieved in the Sportstyle, running and training, and Motorsport categories. In the apparel division, sales increased by 22.6 percent reported and 20.5 percent currency adjusted to 2,068.7 million euros (2,233.6 million dollars) driven by strong growth in Sportstyle, running and training as well as Motorsport categories. As a result, sales in the apparel division exceeded the two billion Euro sales mark for the first time. The accessories division showed a sales increase of 13.5 percent reported and 11.1 percent currency adjusted to 881.1 million euros (951.3 million dollars) with higher sales of legwear, bodywear and Cobra golf clubs contributing to the increase.

Wholesale sales increased 15 percent currency adjusted, supported by a strong performance of our key accounts, while Puma’s direct-to-consumer sales (owned and operated retail stores and ecommerce) increased by 22 percent currency adjusted to 1,395.3 million euros (1,506.5 million dollars), driven by like-for-like sales growth in our own stores, the expansion of retail store network and a continued strong growth of ecommerce business.

Puma’s net earnings improve strongly in FY19

The operating result (EBIT) increased by 46.8 percent to 55.2 million euros (59.5 million dollars) due to a strong sales growth combined with an improved gross profit margin and operating leverage. Puma’s gross profit in the financial year 2019 increased by 19.4 percent to 2,686.4 million euros (2900 million dollars) and gross profit margin improved by 40 basis points to 48.8 percent.

The operating result (EBIT) improved by 30.5 percent to 440.2 million euros (475 million dollars) in 2019. EBIT margin went up from 7.3 percent in 2018 to 8 percent in 2019. Net earnings rose by 40 percent from 187.4 million euros last year to 262.4 million euros in 2019. This translated into improved earnings per share of 1.76 euros compared to 1.25 euros in 2018.

For the full year 2020, Puma expects currency adjusted sales growth of around 10 percent and gross profit margin is expected to show a slight improvement compared to last year’s 48.8 percent. Based on the current exchange rate levels we expect an operating result (EBIT) for the financial year 2020 in a range between 500 million euros and 520 million euros with a significant improvement of net earnings in 2020.

The company added that corona virus has negatively impacted business since the beginning of February, especially true in China where more than half of both own and operated and partner stores are temporarily closed due to restrictions of the local authorities. Business is further impacted in other markets, especially in Asia, due to decline of Chinese tourism business. The company expects this to have a negative impact on total Sales and EBIT for the first quarter 2020.

The company’s management board and the supervisory board will propose to the annual general meeting on May 7, 2020, a dividend of 0.50 euros per share for the financial year 2019.

Picture:Puma newsroom