Puma reported stronger than expected second-quarter earnings on “very strong growth” across its product range and raised its revenue outlook for the full-year 2022. Earnings guidance was maintained as Puma warned of uncertainties that could dilute profitability.

2022 Second Quarter Facts

  • Sales increase by 18.4 percent currency adjusted (ca) to €2,002 million (+26.0 percent reported / Q2 2021: €1,589 million) 
  • Gross profit margin decreases to 46.5 percent (Q2 2021: 47.5 percent) 
  • Operating expenses (OPEX) increase by 21.6 percent to €791 million, while OPEX ratio improves
  • Operating result (EBIT) improves by 34.4  percent to €146 million (Q2 2021: €109 million) 
  • EBIT margin increases by 40 basis points to 7.3 percent (Q2 2021: 6.9 percent)
  • Net earnings improved by 73.2 percent to €84 million (Q2 2021: € 49 million)
  • Héloïse Temple-Boyer was elected as Chair of the Supervisory Board of Puma SE
  • Puma and AC Milan announce a long-term extension of their partnership 
  • Puma introduces its shopping app in India and kicks off Web3 collaborations with 10KTF and Roblox
  • Puma is ranked the most sustainable brand on the Business of Fashion Sustainability Index 2022
  • Puma and Italian Lega Serie A release official ball for the 2022/23 season
  • Puma releases four national team home kits for the UEFA Women’s Championship
  • Puma and Breanna “Stewie” Stewart release the Stewie 1, the first women’s signature basketball shoe in over a decade
  • Puma and LaMelo Ball released a special edition basketball shoe MB.01 Galaxy
  • Puma and Neymar Jr. launch the Slipstream sneaker campaign
  • Puma teams Manchester City and AC Milan win national league titles 

EBIT of €146 million topped analysts’ average forecast for EBIT of €128.94 million. Sales of €2,002 million were ahead of analysts’ average forecast of €1,900 million.

2022 Half-Year Facts

  • Sales increase by 19.0 percent (ca) to €3,914 million (+24.7 percent reported / H1 2021: €3,138 million)
  • Gross profit margin decreases to 46.8 percent (H1 2021: 48.0 percent) 
  • Operating expenses (OPEX) increased by 20.2 percent to €1,504 million (H1 2021: €1,252 million)
  • Operating result (EBIT) improves by 30.1 percent to €342 million (H1 2021: €263 million)
  • EBIT margin increases by 30 basis points to 8.7 percent (H1 2021: 8.4 percent)
  • Net earnings improved by 30.3 percent to €206 million (H1 2021: €158 million)

Bjørn Gulden, CEO, Puma SE, said, “The second quarter was another great quarter for us. With a currency-adjusted growth of 18 percent (26 percent reported) to €2,002 million, we exceeded €2 billion in quarterly sales for the first time in Puma’s history. This underlines the strong demand for our products despite all the global obstacles and uncertainties!
I am especially proud that we have again seen strong growth in all our performance categories like Running, Training, Teamsports, Golf, and Basketball. We feel that the increased investments into R&D, Innovation and Product Development over the past years are starting to pay off.

“Our gross margin is currently under pressure and declined by 100 basis points to 46.5 percent, mainly due to an unfavorable geographical and channel mix and the higher freight rates. Despite increasing costs, we will continue to focus on keeping our prices competitive and prioritize sales growth and market share gains above short-term profitability.
Due to our strong sales growth, we managed to increase our EBIT by 34 percent from €109 million in Q2 2021 to €146 million in Q2 2022 despite increased investments into marketing and sales and higher warehousing costs.

“We do see an increased level of uncertainty around the world: COVID-19 is still around us, the crisis in Ukraine is worse than ever, and there is high inflationary pressure in almost all our markets.

“Despite all these uncertainties, we will continue to invest in our people, brand and infrastructure. We will also continue with our “People First” attitude and do everything we can to ensure the health and safety of all our people, especially in Ukraine. The Puma Family means more than short-term profitability. I remain optimistic for our sector in general and the Puma brand in particular, and we even raise our revenue outlook for the full year 2022.”

Second Quarter 2022
Sales increased by 18.4 percent (ca) to €2,002.0 million (+26.0 percent reported), representing the highest quarterly sales in Puma’s history. Continued high demand for the Puma brand in the Americas region resulted in a strong sales growth of 25.6 percent (ca). Sales in EMEA were up 21.5 percent (ca), driven by strong growth across all European key markets. Sales in Asia/Pacific declined 1.8 percent (ca) due to COVID-19-related lockdown measures in Greater China, while other major markets in Asia/Pacific recorded strong growth. All product divisions grew double-digit, with Footwear being up 19.7 percent (ca), Apparel up 20.2 percent (ca), and Accessories up 11.2 percent (ca). In line with previous quarters, growth was driven by continued strong demand for its Performance categories like Running & Training, Teamsports, Golf, and Basketball, as well as for the Sportstyle category.

Puma’s Wholesale business increased by 22.6 percent (ca) to €1,563.2 million, and its DTC business was up by 5.5 percent (ca) to €438.8 million. Sales in owned & operated retail stores increased 11.3 percent (ca), while e-commerce declined 4.1 percent (ca), mainly due to lockdown measures in Greater China. Puma said it continues to execute its strategy of being the best partner for its retailers and continued to prioritize them over DTC.

The gross profit margin decreased by 100 basis points to 46.5 percent, mainly caused by an unfavorable geographical and channel mix and higher freight rates, while currencies had a positive effect.

Operating expenses (OPEX) increased by 21.6 percent to €791.2 million as a result of higher marketing expenses, more retail stores operating as well as higher sales-related distribution and warehousing costs. Despite ongoing operating inefficiencies due to COVID-19, especially in the supply chain, the OPEX ratio decreased to 39.5 percent (Q2 2021: 40.9 percent) due to higher sales growth and continued OPEX control.

The operating result (EBIT) increased by 34.4 percent to €146.3 million (Q2 2021: €108.9 million). Strong sales growth and an improved OPEX ratio resulted in an EBIT margin increase by 40 basis points to 7.3 percent (Q2 2021: 6.9 percent).

Net earnings increased by 73.2 percent from €48.7 million to €84.3 million and earnings per share were up from €0.33 in the second Quarter of 2021 to €0.56 in the second Quarter of 2022.

First Half Year 2022
Sales increased by 19.0 percent (ca) to €3,914.1 million (+24.7 percent reported). Americas led the growth with a 33.6 percent (ca) increase in sales, followed by the EMEA region, with all key markets in Europe contributing strong growth to a 23.5 percent (ca) increase in sales. Sales in the Asia/Pacific region were down 10.4 percent (ca) due to geopolitical tensions and COVID- 19 related lockdown measures in Greater China. At the same time, other major markets in Asia/Pacific recorded strong growth. All product divisions grew double-digit, with Footwear being up 18.9 percent (ca), Apparel up 18.1 percent (ca), and Accessories up 20.9 percent (ca).

The Wholesale business was up 22.9 percent (ca) to €3,091.4 million and its DTC business increased by 6.2 percent (ca) to €822.8 million. Sales in owned & operated retail stores increased 15.8 percent (ca), while e-commerce declined 8.6 percent (ca). E-commerce was impacted by its continued prioritization of retail partners and the lockdown measures in Greater China.

The gross profit margin decreased by 120 basis points to 46.8 percent (H1 2021: 48.0 percent). The decline was mainly caused by an unfavorable geographical and channel mix and higher freight rates, partially offset by currencies.

Operating expenses (OPEX) increased by 20.2 percent to €1,504.1 million (H1 2021: €1,251.5 million). Higher marketing expenses, more retail stores operating, higher sales-related distribution and warehousing costs, and operating inefficiencies due to COVID-19, contributed to this increase. However, the respective OPEX ratio decreased from 39.9 percent in the first half of 2021 to 38.4 percent in the first half of 2022 due to higher sales growth and continued OPEX control.

The operating result (EBIT) increased by 30.1 percent to €342.4 million (H1 2021: €263.2 million) due to strong sales growth and an improved OPEX ratio. The EBIT margin improved by 30 basis points to 8.7 percent (H1 2021: 8.4 percent).

Net earnings increased by 30.3 percent from €157.8 million to €205.6 million and correspondingly, earnings per share were up from €1.06 in the first half of 2021 to €1.37 in the first half of 2022.

Working Capital
The working capital increased by 54.3 percent to €1,067.4 million (June 30, 2021: €691.9 million). Inventories were up by 42.9 percent to €1,984.4 million (June 30, 2021: €1,388.7 million), which continued to be impacted by higher Goods in Transit. Trade receivables increased by 27.8 percent to €1,189.8 million (June 30, 2021: €931.1 million), mainly due to strong sales growth. Regarding liabilities, trade payables increased by 30.4 percent to €1,657.1 million (June 30, 2021: €1,270.6 million).

Cash Flow and Liquidity Situation
The free cash flow improved by 57.1 percent to €38.6 million in the first half of 2022 (H1 2021: €24.6 million). As of June 30, 2022, Puma had cash and cash equivalents of €498.4 million, a decrease of 34.0 percent compared to the first half of 2021 (June 30, 2021: €755.2 million). In addition, the Puma Group had credit lines totaling €1,276.9 million as of June 30, 2022 (June 30, 2021: €1,424.1 million). Unutilized credit lines amounted to €923.6 million on the balance sheet date compared to €933.7 million in the first half of 2021.

Outlook 2022
Puma said, “Puma performed very well in the first half of the year 2022. Based on continued brand momentum, successful product launches with strong sell-through and the best possible service to our retail partners and consumers, we delivered strong sales and EBIT growth.

“While the first half of the year has been strong, we continue to face increasing geopolitical and macroeconomic uncertainties and challenges. The ongoing COVID-19-related restrictions, particularly in Asian markets, the crisis in Ukraine and persistently high inflation are negatively impacting consumer confidence and demand. In addition, ongoing supply chain constraints and price increases in sourcing and freight are limiting product availability and putting pressure on margins.

“Considering the strong first half of the year, Puma is raising its outlook from previously at least ten percent currency-adjusted sales growth, with upside potential,  to mid-teens currency-adjusted sales growth. Due to the increased uncertainties, we reiterate our operating result (EBIT) to be in a range of €600 million to €700 million for the financial year 2022 (2021: €557 million) and a corresponding improvement in net earnings. The development of our gross profit margin and OPEX ratio will continue to depend largely on the extent and duration of the negative impacts described above. We expect inflationary pressures from higher freight rates and raw material prices, as well as operational inefficiencies due to COVID-19 and the Ukraine crisis, to dilute our profitability in 2022.

“As in previous years, Puma will continue to focus on managing the short-term challenges without hindering the mid-term momentum and prioritize sales growth and market share gains over short-term profitability. The strong and profitable growth in the first half of the year, a strong order book, an exciting product line-up, as well as very good feedback from retailers and consumers, make us confident for the mid-term success and growth of Puma.”

Photo courtesy Puma