Puma said it still anticipates currency-adjusted sales will increase “by at least 10 percent” in 2022, although it left the door open to “upside potential” after posting better-than-expected sales growth in the first quarter. Sales in the first three months of the year increased by 19.7 percent in local currencies, or a reported 23.5 percent, to €1,912.2 million, as brand momentum continued despite new Covid-19 restrictions in China and other markets, persistent supply chain constraints, the impact of the war in Ukraine and widespread inflationary pressures.

Bjorn Gulden, the company’s CEO, said the sales growth in the first quarter of 2022 was slightly higher than expected “because we weren’t sure we would be able to supply this growth.” He added that Puma’s trading performance to date in April has been in line with March. “If things work out on the operational side, and they have so far, we should also see good growth in the second quarter. The reason guidance hasn’t changed, other than the upside potential, is that uncertainty has increased.”

Puma - Income
Quarter ended March 31 (€ million)
  2022 2021 % change
Sales 1,912.2 1,548.8 23.5%
Cost of sales 1,010.0 797.9 26.6%
Gross profit 902.2 750.9 20.1%
Other operating income & expense 712.8 601.1 18.6%
Operating result (EBIT) 196.0 154.3 27.0%
Financial result -13.0 0.5
Pre-tax 183.0 154.8 18.2%
Tax 46.7 39.5 18.2%
Net 121.4 109.2 11.2%
Earnings per share (diluted) 0.81 0.73 11.0%
Source: Puma

Puma’s Ebit in the first quarter improved by 27.0 percent to €196 million, as the Ebit margin widened by 0.3 percentage points to 10.3 percent. Operating expenses climbed by 18.6 percent to €712.8 million as more retail stores were open for business and distribution, warehousing and marketing expenses grew. Although operating inefficiencies tied to Covid-19 have continued, Puma’s operating expense ratio declined to 37.3 percent from 38.8 percent the year earlier. Net earnings rose by 11.2 percent to €121 million.

The German sportswear company’s gross margin decreased by 1.3 percentage points to 47.2 percent, a result of the negative impact of higher freight costs and the unfavorable geographical and channel mix, namely a decline in sales in China and the slower pace of growth in its DTC business compared to wholesale. These factors outweighed a slightly positive impact from currencies that Puma anticipates will continue in the remaining quarters of the year. On a like-for-like basis, management said the gross margin was generally flat.

Sales of Puma’s wholesale business increased by a currency-adjusted 23.3 percent to €1,528.2 million while the DTC business rose by 7.1 percent to €380.0 million, with sales in owned & operated stores rising 21.3 percent and e-commerce falling 13.2 percent. The company continued with a strategy of prioritizing retailers when supply is tight, while online sales also continued to suffer from a Chinese boycott on western brands underway since March 2021.

The company expects inflationary pressures could be here to stay through 2023. Gulden said that Puma is increasing prices gradually as input costs progressively rise. For the spring/summer season, price increases have stood at about 3 to 5 percent at the cash register, he said.

The strongest sales growth in the first quarter was seen in the Americas, where revenues rose by a currency-adjusted 44.1 percent amid continued high demand in both North America, where Gulden said Puma struggles with an inventory level that is “too low,” and Latin America. Sales in the EMEA region grew by 25.5 percent at constant currencies, with “strong” growth registered in all key markets.

Puma - Sales
Quarter ended March 31 (€ million)
  2022 2021 % change
By region
EMEA 708.8 572.4 23.8%
Americas 815.9 533.9 52.8%
Asia-Pacific 387.4 442.4 -12.4%
Total 1,912.2 1,548.8 23.5%
By segment
Footwear 941.3 773.8 21.6%
Apparel 638.7 532.0 20.1%
Accessories 332.2 243.0 36.7%
Total 1,912.2 1,548.8 23.5%
Source: Puma

On the other hand, sales in the Asia-Pacific region fell a currency-adjusted 17.0 percent, led by a 37 percent decline in China, where the ongoing boycott and Covid-19 related restrictions that have been imposed amid an upswing in infections have damaged Puma’s sales performance. In the first quarter of 2021, Puma’s sales in China had jumped some 40 percent.

Gulden said production in China, where Puma sources about one-third of total output, has been unaffected by new Covid-19 restrictions. Although only about 10 percent of Puma and its partners’ stores in the country are currently closed, “the traffic in those that are opened is so low that it doesn’t mean anything,” said Gulden. He said he hoped the Chinese market would pick up in the second half of 2022 as consumers emerge from the latest round of lockdowns but stressed the company isn’t counting on that.

By product category, Puma’s first-quarter footwear sales increased by a currency-adjusted 18.2 percent, and apparel grew by 16.0 percent. Accessories posted 32.2 percent growth, supported by the purchase of golf products and items like backpacks, socks and underwear.

Inventories in the quarter were up by 32.2 percent to €1,618.3 million, as the company seeks to manage persistent shipping delays, with a 63.1 increase for goods in transport and an 18.6 percent rise for goods on hand in warehouses. “We will try to keep inventories as high as we can,” said Gulden, “We are trying to ship out everything we can, especially now because of the risk of Covid-19 lockdowns.”

Puma continues to anticipate Ebit for the full year of €600 million-€700 million and a corresponding improvement in net earnings. Gulden said the company will continue to prioritize market share gains and mid-term growth over short-term profit optimization, increasing pressure on operating expenses and gross margin in the near term.