Puma said it now expects currency-adjusted sales to expand at least 25 percent for 2021, up from at least 20 percent previously, and also raised its earnings guidance after reporting healthy third-quarter growth. Sales in the third quarter rose 20 percent currency-neutral, led by a 31 percent gain in the Americas region.

2021 Third Quarter Highlights

  • Sales increase by 20 percent currency adjusted (ca) to €1,900 million (Q3 2020: €1,583 million);
  • Gross profit margin improves to 47.4 percent (Q3 2020: 47.0 percent);
  • Operating expenses (OPEX) increase to €678 million (Q3 2020: €560 million);
  • Operating result (EBIT) improves to €229 million (Q3 2020: €190 million);
  • Net earnings improve to €144 million (Q3 2020: €114 million);
  • Puma athletes win 75 medals at the Tokyo Olympic and Paralympic Games;
  • Puma athlete Karsten Warholm wins a Gold medal and sets 400m hurdles world record;
  • Puma athlete Molly Seidel wins marathon Bronze medal in Tokyo wearing Puma’s Deviate Nitro running shoe;
  • Puma athlete LaMelo Ball debuts his Puma MB.01 signature basketball shoe, which is scheduled to launch in December;
  • Puma announces it signed French NBA player Killian Hayes;
  • Puma announces a long-term partnership with U.S. soccer player Christian Pulisic;
  • Puma launches its first lifestyle collection with Neymar, Jr.;
  • Puma introduces shoebox design which it said will save 2,800 tons of cardboard per year; and
  • Puma is included in DAX40, Germany’s stock market index of the largest companies.

2021 Nine Months Highlights

  • Sales increase by 39 percent (ca) to €5,038 million (9M 2020: €3,714 million);
  • Gross profit margin improves to 47.8 percent (9M 2020: 46.5 percent);
  • Operating expenses (OPEX) increase to €1,930 million (9M 2020: €1,596 million);
  • Operating result (EBIT) improves to €492 million (9M 2020: €146 million); and
  • Net earnings improve to €302 million (9M 2020: €54 million).

Bjørn Gulden, CEO, Puma SE, said, “The third quarter was another very strong quarter for us. Despite a lot of operational
problems, we grew our sales by 20 percent and were able to increase our EBIT from €190 million to €229 million in the quarter. A COVID-19-related lockdown of production in South Vietnam, an overheated global freight market with high rates and a lack of capacity, port congestion, and a very difficult market situation in China were hurdles we had to overcome in the quarter. Demand for our products was high, our teams worked very hard to deliver as much product as possible, and we continued to be as flexible and service-minded for our partners as we could be. We foresee the high demand for our products to continue, but we also see supply constraints continue to be a problem for the rest of the year. We will continue to maneuver through the operational problems as well as possible, but we will also continue to invest in our brand, products and infrastructure for the mid and long term. The outlook for our industry in general, and for Puma in particular, is, in my opinion, very positive.”

Third Quarter 2021

  • Sales increased by 20.4 percent (ca) to €1,900.4 million (+20.0 percent reported). The Americas reported the strongest growth of 31.2 percent (ca), driven by continued high demand for the Puma brand in the North American and Latin American markets. EMEA recorded growth of 22.3 percent (ca), which was driven by strong demand in Europe and emerging markets such as Russia, Turkey and South Africa. Asia/Pacific grew 1.7 percent (ca) despite a difficult market environment in Greater China and COVID-19 related lockdowns in markets such as Japan, South East Asia and Australia. In terms of product divisions, Footwear was up by 21.6 percent (ca), based on continued strong demand for its Performance and Sportstyle categories. Apparel (+21.3 percent ca) and Accessories (+15.2 percent ca) also showed double-digit growth in the third quarter of 2021. Compared to the third quarter of 2019, total sales were up 35.4 percent (ca).
  • Wholesale business grew by 22.6 percent (ca) to €1,470.5 million and the Direct-toConsumer (DTC) business increased by 13.3 percent (ca) to €429.9 million, with growth across owned & operated retail stores (+18.0 percent ca) and e-commerce (+4.0 percent ca). In line with its strategy to be a good and reliable partner for its wholesale accounts, we continued to prioritize them when supply was limited.
  • Gross profit margin in the third quarter improved by 40 basis points to 47.4 percent (Q3 2020: 47.0 percent / Q3 2019: 49.7 percent). The improvement in gross profit margin was driven by better sellthrough and less promotional activity, while currency, geographical and channel mix effects as well as higher freight rates had a negative impact.
  • Operating expenses (OPEX) increased by 21.2 percent to €678.0 million (Q3 2020: €559.6 million / Q3 2019: €578.5 million) as a result of higher marketing expenses, more retail stores operating as well as higher sales-related distribution and warehousing costs. Puma continued to face operating inefficiencies, especially in our supply chain in the third quarter due to COVID-19. Consequently, the OPEX ratio increased from 35.3 percent in the third quarter of 2020 to 35.7 percent in the third quarter of 2021 (Q3 2019: 39.2 percent).
  • Operating Results (EBIT) in the third quarter increased to €228.9 million (Q3 2020: €189.5 million / Q3 2019: €162.2 million) due to strong sales growth, improved gross profit margin and continued OPEX control. This resulted in an EBIT margin of 12.0 percent in the third quarter of 2021 (Q3 2020: 12.0 percent / Q3 2019: 11.0 percent).
  • Net earnings increased from €113.6 million to €143.8 million and earnings per share improved from €0.76 in the third quarter of 2020 to €0.96 in the third quarter of 2021.

Nine Months 2021

  • Sales increased by 39.1 percent (ca) to €5,038.3 million (+35.6 percent reported). The strong sales development was driven by double-digit growth rates in all regions and product divisions. Compared to the first nine months of 2019, Puma’s sales grew 32.0 percent (ca).
  • Wholesale business was up 42.0 percent (ca) to €3,872.5 million while the Direct-to-Consumer business (DTC) increased by 30.3 percent (ca) to €1,165.8 million with growth in owned & operated retails stores (+35.0 percent ca) as well as e-commerce (+22.5 percent ca).
  • Gross profit margin in the first nine months of 2021 improved by 130 basis points to 47.8 percent (9M 2020: 46.5 percent / 9M 2019: 49.4 percent). The improvement in gross profit margin was driven by better sell-through and less promotional activity, while geographical and channel mix effects had a negative impact.
  • Operating expenses (OPEX) increased by 20.9 percent to €1,929.5 million (9M 2020: €1,596.4 million / 9M 2019: €1,620.7 million). Higher marketing expenses, a higher number of retail stores in operation, higher sales-related distribution and warehousing costs, as well as operating inefficiencies due to COVID-19, contributed to this increase. However, the respective OPEX ratio decreased from 43.0 percent in the first nine months of 2020 to 38.3 percent in the first nine months of 2021 (9M 2019: 40.3 percent) due to higher sales growth and continued OPEX control.
  • Operating results (EBIT) in the first nine months of 2021 increased significantly to €492.1 million (9M 2020: €145.9 million / 9M 2019: €385.0 million) due to strong sales growth, higher gross profit margin and continued OPEX control. This led to an improved EBIT margin of 9.8 percent in the first nine months of 2021 (9M 2020: 3.9 percent / 9M 2019: 9.6 percent).
  • Net earnings increased from €54.2 million to €301.7 million and earnings per share were up from €0.36 in the first nine months of 2020 to €2.02 in the first nine months of 2021.

Working Capital
The working capital increased by only 2.3 percent to €719.0 million (September 30, 2020: €703.2 million / September 30, 2019: €915.7 million). Inventories which include Goods in Transit were up by 11.6 percent to €1,363.9 million. The COVID-19 related lockdown in South Vietnam and corresponding delays restricted the product supply and consequently limited inventory levels at the end of the third quarter. As a result of the strong sales development in the third quarter, trade receivables rose by 39.0 percent to €1,058.6 million. On the liabilities side, trade payables were up by 28.4 percent to €1,202.8 million.

Outlook 2021
Puma wrote, “2021 started with an all-time high of COVID-19 cases globally and continued restrictions for our operations in numerous markets as well as supply chain constraints due to container shortages and port congestion. In addition to the implications from the COVID-19 pandemic, political tensions in some of our key markets also had a significant impact on our business.

“Despite the uncertainty, Puma has maneuvered well throughout the first nine months of the year, based on continued brand momentum, successful product launches with high sellthrough and a strong focus on flexibility in our operations. Considering the strong financial performance in the first nine months of the year, Puma further specifies its outlook and now expects the currency-adjusted sales to increase at least 25 percent (previous outlook: at least 20 percent currency-adjusted sales growth) in the financial year 2021. The operating result (EBIT) is now expected to be in a range between €450 million and €500 million (previous outlook: between €400 and €500 million). In line with the previous outlook, Puma does not provide a detailed outlook on the gross profit margin and OPEX development. The net earnings are still expected to improve significantly in 2021. As a result of the longer-than-expected lockdown in South Vietnam as well as port congestion and container shortages, the industry faces delays, which are having a negative impact on Puma’s product supply in the short term. Puma will continue to maneuver through these challenges by building on its brand momentum and operational flexibility. The strong and profitable growth in the first nine months of 2021, a strong product line up, as well as very good feedback from retail partners and consumers, make us confident for the mid-term success and growth of Puma.”

Photo courtesy Puma