Puma’s sales in the Americas region showed positive sales growth in the first quarter on a currency-neutral basis for the first time in four quarters but reported sales and earnings declined due to unfavorable currency effects and challenging year-ago comparisons. The results were in line with company expectations, and full-year guidance was maintained.

Key developments Q1 2024

  • Currency-adjusted (ca) sales increased by 0.5 percent to €2,102 million, reflecting a negative currency impact of approximately €100 million (-3.9 percent reported).
  • Gross profit margin improved by 100 basis points to 47.5 percent despite major currency headwinds.
  • Operating expenses (OPEX) decreased by 0.4 percent to €845 million.
  • Operating result (EBIT) declined by 9.4 percent to €159 million, mainly due to negative currency effects on sales, gross profit margin and OPEX ratio.
  • 2024 Outlook confirmed currency-adjusted sales growth at a mid-single-digit percentage rate and EBIT in a range between €620 million and €700 million.
  • Puma launched first global brand campaign in ten years.

Arne Freundt, chief executive officer of Puma SE, said, “We delivered our first quarter results fully in line with expectations. While the market continues to be volatile, we delivered growth and gross profit margin improvement despite significant currency headwinds and high prior-year comparables. Our retail partners are still working through elevated stock levels, but as our sell-through was higher than our sell-ins, we jointly improved the inventory levels in the wholesale channel. We expect that we will improve sell-in in the course of Q2. Our double-digit growth in DTC with fewer discounts confirms the continued strong demand for the brand and, thus, continued good sell-through.

“Our strong momentum in performance categories driven by exciting innovations and newness is ongoing, and we are further growing our market shares. For our Sportstyle category, 2024 is a transition year to build future success in the elevated distribution. Our go-to-market and demand-creation processes are starting to improve and are crucial as a foundation for the success of Sportstyle. We already see that sales of our trending terrace and skate styles Palermo and Suede XL are accelerating month over month and we are very excited to launch our vintage running franchise Easy Rider and low profile shoes Mostro, Speedcat and Inhale this year. With our good order book for the second half of the year and the great start of our brand campaign, I feel very confident about our sequential quarter-over-quarter improvement in 2024.

“We are focusing our efforts on building the foundation for the next chapter of growth based on increased brand desirability. The launch of our first brand campaign in a decade was an important first step and the first results came in above our expectations. I could not imagine a better year than the 2024 Year of Sport to advance Puma’s brand elevation journey. We are looking forward to celebrating this summer’s events with our employees, consumers, retail partners and brand ambassadors.”

First Quarter 2024
Sales increased by 0.5 percent (ca) to €2,102.3 million from a strong quarter in the previous year (Q1 2023 grew 14.4 percent ca and reported). Currencies have continued to be a major headwind since Q2 2023, negatively impacting sales in euro terms by approximately €100 million in Q1 2024 (-3.9 percent reported).

The Americas region recorded positive sales growth for the first time in four quarters, growing by 1.0 percent (ca) to €790.0 million, with the U.S. showing a sequential improvement. 

Sales in the Asia/Pacific region increased by 0.6 percent (ca) to €456.6 million, driven by continued growth in Greater China. In the EMEA region, sales were flat (ca) at €855.7 million, with Europe coming in better than expected.

Puma’s wholesale business declined by 2.9 percent (ca) to €1,608.1 million, reflecting the continued focus on good sell-through and prudent sell-in to improve inventory levels in the market. 

The Direct-to-Consumer (DTC) business grew by 13.5 percent (ca) to €494.2 million, driven by continued brand momentum and scaled-back promotions, resulting in an increased DTC share of 23.5 percent (Q1 2023: 21.3 percent), in line with expectations.

Sales in Footwear were up 3.1 percent (ca) to €$1,181.5 million, primarily driven by continued strong demand for Football and other performance categories. Sales in Apparel and Accessories declined by 2.4 percent to €$608.1 million and 3.2 percent (ca) to €$312.7 million, respectively.

The gross profit margin improved by 100 basis points to 47.5 percent (Q1 2023: 46.5 percent). Significant headwinds from currencies were more than offset by lower sourcing and freight costs and a favorable product and distribution channel mix.

Operating expenses (OPEX) decreased by 0.4 percent to €845.3 million (Q1 2023: €848.3 million). While marketing investments remained at 10 percent of sales, strict cost discipline in non-demand generating areas mostly offset warehouse ramp-up costs, investments in digital infrastructure and inflationary pressures. The OPEX ratio increased by 140 basis points to 40.2 percent (Q1 2023: 38.8 percent), mainly due to a higher DTC share and currency headwinds.

The operating result (EBIT) decreased by 9.4 percent to €159.0 million (Q1 2023: €175.5 million), mainly due to currency headwinds on sales, gross profit margin and OPEX ratio. As a result, the EBIT margin declined 50 basis points to 7.6 percent (Q1 2023: 8.0 percent). The financial result decreased to €-26.8 million (Q1 2023: €-7.8 million) due to lower gains related to forward exchange transactions (“swap points”) and higher interest rates. Consequently, net income decreased by 25.5 percent to €87.3 million (Q1 2023: €117.3 million) and earnings per share amounted to €0.58 (Q1 2023: €0.78).

Working Capital
The working capital increased by 5.4 percent to €1,845.7 million (31 March 2023: €1,751.5 million). Inventories decreased by 16.8 percent to €1,785.6 million (31 March 2023: €2,147.3 million), mainly due to the elevated comparative base of the previous year, and remain at a healthy level. Trade receivables increased by 12.2 percent to €1,432.5 million (31 March 2023: €1,276.9 million) due to timing and the regional mix. On the liabilities side, trade payables decreased by 4.7 percent to €1,222.8 million (31 March 2023: €1,282.7 million).

Outlook 2024
Puma said, “In line with our expectations, the year 2024 has started with geopolitical and macroeconomic challenges as well as currency volatility. In this environment, we continued to make further progress on our strategic priorities of brand elevation, product excellence and distribution quality, particularly in the key markets U.S. and China.

“2024 is not only the year of sports, with major events such as the UEFA Euro 2024, Connebol, Copa América, and the Olympic and Paralympic Games providing the perfect platform to showcase our strong product innovation and credibility as a performance brand, it is also the year in which Puma has started to invest into its first global brand campaign in 10 years to sharpen its positioning as the fastest sports brand in the world.

“Supported by the continued brand momentum and despite ongoing geopolitical and macroeconomic challenges, Puma expects to achieve mid-single-digit currency-adjusted sales growth and an operating result (EBIT) in the range of €620 million to €700 million for the financial year 2024 (2023: €621.6 million). We expect net income (2023: €304.9 million) to change in 2024 in line with the operating result.

“As in previous years, Puma will continue to focus on managing short-term challenges without compromising the brand’s medium and long-term momentum. Our sales growth and market share gains will take priority over short-term profitability. The exciting product newness and innovation for 2024/2025, as well as the very good feedback from retail partners and consumers, give us confidence for the medium and long-term success and continued growth of Puma.”

Image courtesy Puma