Puma Q4 profits improve, sales increase by 20 percent
For its fourth quarter, Puma reported sales growth of 20.1 percent currency adjusted and 17.9 percent reported to 1,226.4 million euros (1,384 million dollars). In the financial year 2018, Puma’s sales increased by 17.6 percent currency adjusted or 12.4 percent reported to 4,648.3 million euros (5,246.7 million dollars). The company said, significant difference between reported and currency-adjusted sales growth was due to the weakness of several major currencies against the euro.
Net earnings in the fourth quarter improved from 2.2 million euros last year to 15.7 million euros (17.7 million dollars) and earnings per share increased from 0.14 euros last year to 1.05 euros. Net earnings increased by 38 percent to 187.4 million euros (211.4 million dollars) in 2018. This translates into improved earnings per share of 12.54 euros compared to 9.09 euros last year.
Review of Puma’s fourth quarter results
The company said, sales growth was particularly strong in the Asia/Pacific region followed by the Americas, both increasing at double-digit rates. Both apparel and footwear showed strong growth in the quarter, improving 28.6 percent and 17.4 percent respectively. For Footwear, it was the 18th consecutive quarter of sales growth.
The gross profit margin in the fourth quarter, Puma added, remained stable at a high level of 47.1 percent, despite negative currency impacts in the quarter. The operating result (EBIT) improved by 26.1 percent to 37.6 million euros (42.4 million dollars) during the quarter due to the strong sales growth combined with an OPEX increase at a slightly lower rate than sales.
Full year sales increase across core geographies
Full year sales in the EMEA region rose by 11.4 percent currency adjusted and 9.4 percent reported to 1,800.3 million euros (2,031.8 million dollars), driven by double-digit growth in the France, Spain, the United Kingdom as well as Russia and Turkey.
Sales in the Americas region went up by 16.9 percent currency adjusted and 7.9 percent reported to 1,612.5 million euros (1,819.8 million dollars), with both North and Latin America contributing double-digit growth rates. Puma added that weakness of the Argentinian peso against the euro, however, led to the significant negative currency impact in the region.
Growth was strong in the Asia/Pacific (APAC) region, where currency-adjusted sales rose by 28.8 percent and 24.2 percent reported driven by high growth in China and Korea, while sales in Japan increased at a more moderate mid to high single-digit rate.
Footwear sales were up 16.6 percent currency adjusted and 10.6 percent reported to 2,184.7 million euros (2,465.6 million dollars), exceeding the 2 billion euros sales mark for the first time driven by growth in running and training as well as Sportstyle categories. In the apparel segment, sales rose by 22.2 percent currency adjusted and 17.1 percent reported to 1,687.5 million euros (1,904.5 million dollars). Sales in accessories grew by 11 percent currency adjusted and 7.8 percent reported to 776.1 million euros (875.9 million dollars) driven by higher sales of legwear and bodywear products.
Including e-commerce, the company’s retail sales increased by 24 percent currency-adjusted to 1.127,5 million euros led by like-for-like sales growth in Puma retail stores, the extension of retail store network as well as the extensive growth of e-commerce business.
The gross profit margin improved by 110 basis points from 47.3 percent to 48.4 percent in 2018. The operating result (EBIT) improved by 37.9 percent to 337.4 million euros (380.8 million dollars) in 2018, which was slightly above the upper end of the revised EBIT guidance of a range between 325 million euros and 335 million euros. The EBIT margin also went up from 5.9 percent in 2017 to 7.3 percent in 2018.
Puma expects FY19 sales growth of around 10 percent
For the full year 2019, Puma expects currency-adjusted sales growth of around 10 percent and the gross profit margin to show a slight improvement compared to last year’s 48.4 percent, while operating expenses (OPEX) is expected to increase at a slightly lower rate than sales.
Based on the current exchange rate levels, management expects an operating result (EBIT) for the financial year 2019 in a range between 395 million euros and 415 million euros compared to 337.4 million euros in 2018. Management also expects a significant improvement of net earnings in 2019. The company said that it is well on track towards achieving the medium-term ambition of 10 percent EBIT margin by 2021/22 with average annual sales growth of 10 percent in constant currency.