Puma’s Q1 Revenues Climb 3.7 Percent

Puma’s Q1 Revenues Climb 3.7 Percent

Puma reported a 3.7 percent gain in first-quarter sales with growth across all segments. Net earnings improved 4.0 percent and the company retained its . Kering, the brand’s parent, reported the basic details of Puma’s results last week.

First-quarter highlights

  • Sales increase by 3.7 percent to €852 million (+7.3 percent currency adjusted), with Footwear being the main growth driver
  • Gross profit margin remains flat at 46.8 percent, as price adjustments, combined with an improved product offering, compensate negative impacts from a stronger US-Dollar
  • EBIT improves by 10.1 percent to €41.3 million, despite increased marketing investments to support key initiatives
  • Strong momentum in women’s business continues, underpinned by the successful launches of new products and marketing concepts

Bjørn Gulden, Chief Executive Officer of PUMA SE:

“The first quarter of 2016 developed as we expected. We saw organic growth in all segments and all regions. The development in certain currencies slowed down the reported growth in both top and bottom line.
We are especially happy to see that our sell through to consumers is improving. Both in our own retail and with our retail partners we see a continuous improvement. This is especially strong in our women’s business, where the launches of new products and new marketing concepts have started to show excellent results.
We do now look forward to this year’s great sport events. The Copa América, the UEFA Euro 2016, and the Olympics in Rio are all events that will have a positive impact on our industry and where we look forward to showcase PUMA as an innovative and design driven sports brand.
Despite the negative impact of currencies we confirm our outlook for the full year.”

Sales Development:

PUMA’s sales growth continued in the first quarter of 2016. Sales increased by 3.7 percent to

€851.9 million (+7.3 percent currency adjusted), compared to €821.4 million in the previous year.

In the EMEA region, sales grew by 3.8 percent to €354.4 million (+6.6 percent currency adjusted), with stronger growth in Germany, Austria, and France. This development was supported by a good performance of the Teamsport category prior to the UEFA Euro 2016. We anticipate further growth in Teamsport for the second quarter leading up to the event. Our teams Italy, Switzerland, Austria, Slovakia, and Czech Republic will all be wearing PUMA jerseys featuring PUMA’s new ACTV Thermo-R technology, which helps to maintain the best body temperature.

Sales in the Americas region remained flat at €288.1 million in reported terms, but grew 5.4 percent on a currency adjusted basis. All major countries in the region continued to improve, while the Latin American region was strongly impacted by the weakness of its currencies, notably the Argentinian Peso. This impacted the sales development in Euro terms severely.

Sales in the Asia/Pacific region recorded the highest growth rate, improving 9.8 percent (+11.2 percent currency adjusted) to €209.4 million. China was the strongest performer in the quarter, followed by India.

PUMA’s Footwear segment grew for the seventh quarter in a row. Sales rose by 3.7 percent (+8.5 percent currency adjusted) to €392.0 million, with strong gains in the Sportstyle as well as the Running and Training categories, supported especially by the successful launches of women’s silhouettes.

With an increase of 3.7 percent (+7.0 percent currency adjusted) to €290.1 million, the performance in Apparel was also positive, as our Training and Teamsport products continued to resonate well with our customers.

Accessories saw a rise of 4.0 percent (+5.1 percent currency adjusted) to €169.8 million despite a continued weak Golf environment.

PUMA’s own and operated retail sales, including e-commerce, increased 15.1 percent currency adjusted to €158.7 million representing 18.6 percent of total sales in the first quarter of 2016. This was achieved by strong like for like sales growth, caused by better product offer and improved consumer experience in the stores, and the expansion of new stores built with the new “Forever Faster” store design.

Gross Profit Margin and Operating Expenses:
The gross profit margin remained broadly unchanged at 46.8 percent, despite the negative currency impact from the stronger US-Dollar in 2016 compared to last year. PUMA was able to successfully implement selective price adjustments and our improved product mix helped to mitigate the negative impact from a stronger US-Dollar. Footwear gross profit margins improved from 42.9 percent to 43.5 percent, while Apparel margins declined from 50.7 percent to 49.9 percent and Accessories softened from 49.6 percent to 49.2 percent.

Operating expenses rose only 3.0 percent and amounted to €361.7 million in the first quarter 2016. That increase stemmed mainly from intensified marketing activities and retail upgrades, while other operating areas and functions were able to keep the cost stable.

Operating Result and Net Earnings:
Operating result (EBIT) was ahead of the first quarter 2015 by 10.1 percent at €41.3 million, as sales grew stronger than operating expenses, supported by a stable gross profit margin.

Net earnings improved by 4.0 percent to €25.8 million (prior year: €24.8 million) and earnings per share were up correspondingly at €1.73 compared to €1.66 in the first quarter 2015.

Working Capital:
PUMA’s working capital increased by 3.2 percent from €744.7 million to €768.4 million in line with the higher sales and business volumes.

Outlook 2016:
We continue to expect a currency adjusted high single digit increase of net sales, a gross profit margin on previous year’s level (45.5 percent), an increase of currency-adjusted operating expenses in a mid to high single-digit range, and an operating result (EBIT) between €115 million and €125 million.

Brand and Marketing:
One highlight for PUMA in the first quarter was the FENTY PUMA by Rihanna fashion show at New York Fashion Week in February. A series of styles for the female consumer have been launched successfully, both in collaboration with Rihanna as well as in our inline collection. Key footwear styles such as Creeper and FENTY Trainer sold out within weeks or days. We also reintroduced our iconic DISC system into running by launching the IGNITE DISC. In Motorsport we introduced the first products under our new partnership with Red Bull Formula One Racing.