Puma fires up, Q2 sales top €1bn, Gomez stars, basketball re-entry a hit
Is Puma missing former owner Kering? Not at all. The German athletic sportswear producer/retailer reported double digit organic growth in H1 as all regions and product divisions performed strongly.
An understated CEO Bjørn Gulden said the business had “developed positively” in H1 as he confirmed its full-year core earnings target growth of around a third higher.
And things are surely going to get better now that Puma is re-entering basketball, with Jay-Z becoming category creative director.
Gulden said Puma has received “very positive feedback” for its plans and its new NBA player roster (Marvin Bagley, Deandre Ayton, Zhaire Smith, Michael Porter Jr and Rudy Gay) were “well received from retailers and basketball fans”.
Puma also announced a long-term partnership with Belgian football star Romelu Lukaku, as it said the World Cup in Russia had been a “good event” for the brand with Uruguay, Switzerland, Serbia and Senegal wearing its kits. Lukaku, and its other partnership footballer, Frenchman Antoine Griezmann, claimed second and third Top Scorer rank at World Cup, respectively.
“The launches of the collections for our new top clubs AC Milan, Olympique de Marseille and Borussia Mönchengladbach were further highlights and have shown our commitment to football,” it noted.
Also, Puma’s ‘brand heat’ initiative, linked to Selena Gomez, showed she was “the most followed person on Instagram”, it claimed. “Selena has been working alongside Puma’s design team to create exciting products for our female consumers.”
Meanwhile, its Women’s category “continued our successful “Do You” campaign with its ambassadors, including Cara Delevingne and the dancers of the New York City Ballet.
“Key styles behind our women’s footwear business were the training shoes Phenom, Muse and Muse Echo, while the newly launched Defy showed promising first results”.
And now for the figures. Q2 sales increased 15% currency-adjusted to €1.049bn (up 8.3% on a reported basis, hit by currency translations due to the strength of the euro, it said).
All regions contributed with double-digit increases as footwear continued to be the main growth driver and apparel and accessories also grew at a double-digit rate.
Gross profit margin improves to 48.6% “mainly due to more sales of new products carrying a higher margin and positive currency effects,” Puma said.
Operating earnings (ebit) jumped 33% to €58m from €43m a year ago, due to a strong sales growth combined with an improved gross profit margin.
Net earnings increased to €31.1m/€2.08 per shares from €21.9m/€1.46 a year ago.
Half-year sales increase 18% currency adjusted to €2.18bn while sales on a reported basis grow “only” 10.5%, due to the negative impact from currency translation, it said.
Including e-commerce, Puma’s own and operated retail sales for the six months leapt 23.7% currency adjusted to €490m, epresenting a share of 22.5% of total sales for the first half, up from 21.8% a year ago.
It cited a “like-for-like sales growth in our own retail stores, the extension of our retail store network and a continued strong growth of our e-commerce business.”
Gross profit margin lifted 160 basis points at 48.4%. Ebit improved 50% to €170m and net earnings jumped to €98.5m/€6.59 per share from €71.5m/€4.79 a year ago.
More pointedly, Gulden said: “The first six months of the year showed major shifts in product trends and consumer demand, especially for footwear. But we feel that our “fast attitude” and quick reaction time allowed us to continue our growth.
“Our strategy has continued to focus on our five priorities: increasing brand heat, offering a competitive product range, proposing a leading offer for women, improving the quality of distribution and strengthening our organisational infrastructure. We feel that Puma is on the right track as our strategy, marketing and products are starting to show results. This has been once again confirmed by improved financial results, increased sell-through performance and the continued positive feedback from our retail partners.”
And the outlook? “Despite the changes in product trends and the uncertain business environment caused by volatile currency rates and difficult global trade environment, we feel confident that we will reach our full-year ebit target between €310m-330m, which is a growth of around 30%.”