Puma reported sales grew 15.6 percent on a currency-neutral basis in the Americas region in the first quarter. Overall sales on a currency-neutral basis climbed 21.5 percent.

On April 12, Puma pre-announced strong first quarter results and raised full-year guidance for 2018 but didn’t provide details.

2018 First-Quarter Facts

  • Sales increase of 21.5 percent currency-adjusted to €1,131 million (+12.5 percent reported), with double-digit growth in all regions and product segments
  • Gross profit margin up by 110 basis points to 48.2 percent
  • Operating expenses (OPEX) increase only 7.5 percent, further improving operating leverage
  • Operating result (EBIT) improved significantly to €112 million (last year: €70 million)
  • The highly exclusive Phenom Lux, the first shoe designed by Selena Gomez and released in limited quantities, will benefit the Lupus Research Alliance
  • Puma will be official sponsor of AC Milan (season 2018/19) and of Brazilian top club
    Sao Paulo Palmeiras (season 2019)
  • Puma signs long-term agreements with World Cup qualifiers Senegalese and Serbian
    Football Associations

Bjørn Gulden, chief executive officer of Puma SE, said, “We started the year with both first-quarter sales and profitability (EBIT) coming in stronger than we had expected. The double-digit sales growth in all regions and product segments, including an exceptionally high growth in Asia, led to a very strong 21.5 percent organic sales increase. Operating result even grew by 60 percent to €112 million due to higher sales, an improvement in our gross margin of 110 basis points and a tight OPEX management. Because of an uncertain business environment caused by volatile currency rates and the difficult economic trade environment, we raised our outlook for the full year only slightly. We now expect our sales to grow 10 percent to 12 percent in local currency (previous 10 percent) and EBIT to come in between €310 to €330 million (previous €305 to €325 million).”

First Quarter 2018

Puma’s sales growth continued in the first quarter of 2018. Sales increased by 21.5 percent currency-adjusted to €1,131.1 million (+12.5 percent reported) compared to €1,005.1 million last year. Due to the strength of the Euro against all other major currencies during the first quarter 2018, there is a 9 percent negative difference between sales growth in Euro and constant-currency terms.

By region, sales in the EMEA reached €480.7 million, up 15.9 percent on a reported basis and 18,6 percent on a currency-neutral basis. Sales in the Americas inched up 0.4 percent on a reported basis to €347.7 million and gained 15.6 percent on a currency-neutral basis.

The gains were led by the Asia/Pacific, which grew 24.1 percent on a reported basis to €302.6 million and gained 34.8 percent on a currency-neutral basis.  China drove the gains.

By product category, footwear led the way, up 16.3 percent on a reported basis to €580.3 million and growing 26.3 percent on a currency-neutral basis. Apparel reached €364.1 million, up 11.6 percent on a reported basis and 20.4 percent on a currency-neutral basis. Accessories’ sales totaled €186.6 million, up 3.7 percent on a reported basis and 10.6 percent on a currency-neutral basis. Running and Training as well as Sportstyle were the categories with the strongest growth rates.

The gross profit margin improved by 110 basis points from 47.1 percent to 48.2 percent. The increase came from a favorable regional sales mix, higher sales of new products with a better margin and further sourcing improvements.

Operating expenses (OPEX) grew by 7.5 percent to €437.3 million in the first quarter. The increase was mainly caused by higher marketing and retail investments as well as higher sales-related variable costs

The operating result (EBIT) increased by 59.9 percent from €70.2 million to €112.2 million in the first quarter 2018 due to a strong sales growth, a higher gross profit margin and an improved operating leverage. This corresponds to an EBIT-margin of 9.9 percent compared to 7.0 percent in the first quarter last year.

Net earnings went up by 35.8 percent to €67.4 million (last year: €49.6 million). This translates into earnings per share of €4.51 compared to €3.32 in the first quarter 2017.

Working Capital

Strong currency effects and continued focus on working capital management led to a decrease of working capital of 1.3 percent to €791.0 million. Omitting these currency impacts, working capital would have grown by approximately 10 percent, lower than growth in business.

Inventories rose only slightly by 1.3 percent to €760.4 million and trade receivables grew by only 5.8 percent to €685.0 million. Trade payables decreased by 8.0 percent to €471.4 million.

Outlook 2018

The first quarter saw a strong increase in sales and profitability, but several uncertainties in the business environment have recently developed. These include adverse and volatile currency developments, political instabilities and the uncertain trade environment between the U.S. and China. Therefore, Puma adjusted guidance for the full year 2018 only slightly. Puma now expects that currency-adjusted sales will increase between 10 percent and 12 percent (previous guidance: currency-adjusted increase by approximately 10 percent). The operating result (EBIT) is now anticipated to come in between €310 million and €330 million (previous guidance: between €305 million and €325 million). In line with the previous guidance, the management still expects that net earnings will improve significantly in 2018.

Photo courtesy Puma