Puma’s revenues for the third quarter rose by 13.3 percent in constant currencies to €1,583, leading to a 13.0 percent rise in net income to €100.5 million. This was in sharp contrast with the second quarter, when the company was hit by a 32.3 percent drop in revenues and ended in the red, but the appreciation of the euro against the dollar, the renmimbi and other currencies led to lower gains in reported terms.

Puma Consolidated Income Statement
(Million Euros, Quarter ended Sept. 30)
  2020 2019 % Change
NET SALES 1,583.4 1,477.6 7.2
Cost of Sales 838.4 742.8 12.9
Royalty/Commissions 4.2 5.9 -28.8
Operating Expenses 559.6 578.5 -3.3
Net Interest Expense 17.6 11.8 49.2
Pre-Tax 171.9 150.4 14.3
Tax 44.7 39.1 14.3
NET 113.6 100.5 13.0
Euro/Share (Diluted) 0.76 0.67 13.4
Source: Puma.
Puma Consolidated Income Statement
(Million Euros, Nine months ended Sept. 30)
  2020 2019 % Change
NET SALES 3,714.3 4,023.6 -7.7
Cost of Sales 1,985.8 2,036.8 -2.5
Royalty/Commissions 13.8 18.9 -27.0
Operating Expenses 1,596.4 1,620.7 -1.5
Net Interest Expense 38.7 16.8 130.4
Pre-Tax 107.2 368.2 -70.9
Tax 27.9 97.9 -71.5
NET 54.2 244.6 -77.8
Euro/Share (Diluted) 0.36 1.64 -78.0
Source: Puma.

The recovery was supported by additional post-lockdown demand, with 20.7 percent growth in the Americas and a 17.7 percent gain in EMEA. Sales in Asia-Pacific declined by 1.9 percent from the year-ago quarter, because of slower growth in Greater China and sales declines in India, Korea and Southeast Asia. In China, slower sales, which inched up by 2 percent, were due to a build-up of inventory during the first half of the year, with many discounts and promotions during the third quarter to reduce it. Bjørn Gulden, Puma’s chief executive, said in a conference call that the level of inventories in the country has now abated, with the fourth quarter looking better. In Latin America, sales gained 9 percent.

Overall, Gulden said, the third quarter developed much better than the group expected, as retail stores reopened, sports events resumed, consumer confidence improved and sales increased week by week. July was flat, but then the business picked up and September was very strong, approaching the performance of a “normal” quarter. October started off strongly, too, but the outlook for the fourth quarter is uncertain.

Footwear, Apparel and Accessories all showed strong growth in the quarter, improving by 13.9 percent, 8.8 percent and 23.0 percent, respectively. Performance categories such as Basketball, Motorsport, Golf and Teamsport showed the highest growth rates. On the sneaker side, higher-end models were very much in demand. Consumers have also been buying more running or hiking shoes. Individual sports are doing well, but sales of products related to team sports are weaker because of restrictions on such activities.

Puma Sales by Region and Product Segments
(Million Euros, Quarter ended Sept. 30)
Region 2020 2019 % Change Currency 
Adjusted Growth
EMEA 664.1 582.2 14.1 17.7
Americas 546.8 498.6 9.7 20.7
Asia-Pacific 372.5 396.8 -6.1 -1.9
Product Segments        
Footwear 700.5 660.1 6.1 13.9
Apparel 607.0 584.9 3.8 8.8
Accessories 275.9 232.6 18.6 23
TOTAL 1,583.4 1,477.6 7.2 13.3
Source: Puma.
Puma Sales by Region and Product Segments
(Million Euros, Nine months ended Sept. 30)
Region 2020 2019 % Change Currency 
Adjusted Growth
EMEA 1,490.8 1,533.1 -2.8 -1.0
Americas 1,227.7 1,377.9 -10.9 -6.5
Asia-Pacific 995.8 1,112.6 -10.5 -9.1
Product Segments        
Footwear 1,726.6 1,889.4 -8.6 -5.4
Apparel 1,333.1 1,485.3 -10.2 -8.0
Accessories 654.6 648.9 0.9 2.2
TOTAL 3,714.3 4,023.6 -7.7 -5.1
Source: Puma.

In the first half, to ensure that its manufacturing partners could continue to operate amid the pandemic, Puma cancelled as few orders as possible, while securing more favorable payment terms. It also worked with retail partners and manufacturers to slow down shipments and extend payment terms to spread the burden over the whole value chain. At the same time, it increased investments in e-commerce.

In the third quarter, the company shipped and produced normally, although Gulden said that the management remains day to day and very local, to respond to local restrictions in various countries. Most of the brick-and-mortar stores – owned and operated by Puma or retail partners – were open throughout the third quarter, but were still limited by many local restrictions. While store traffic remained below last year’s levels, conversion rates continued to be high. Gulden said that consumer patterns have evolved, with less people in stores and more online, producing a great surge in traffic on Puma’s website.

The company made good progress with the upgrade of its logistics network, as it opened a new distribution center in Indianapolis to speed up delivery times. It also continued to work on its Central European warehouse in Geiselwind, Germany, which is on track to be operational by the middle of 2021.

The wholesale business increased by 12.3 percent in constant currencies to €1,202.5 million, which the company attributed to a good sell-through and successful new launches of Puma products, combined with increased confidence among retail partners. Meanwhile, the direct-to-consumer (DTC) business, which includes owned and operated retail stores as well as e-commerce, increased by 16.7 percent to €380.9 million, driven by strong growth in e-commerce of 60.9 percent.

Despite a very promotional market environment and currency developments that put pressure on margins, the company was able to improve its operating results thanks to strong cost control and more efficient marketing. Although the gross margin declined by 2.7 percentage points to 47.0 percent, mainly due to negative currency impacts, more promotional activities and an unfavorable regional mix, the operating result (Ebit) increased by 16.8 percent to €189.5 million, thanks to strong sales growth combined with operating leverage.

Operating expenses decreased by 3.3 percent to €559.6 million, as a result of various cost-saving measures initiated at the end of the first quarter and during the second quarter. Among these, Puma approved a proposal to forego the annual dividend. Investments in new stores were delayed and marketing expenses were cut. It also used short-time work programs, furloughs and temporary layoffs to reduce costs. The group managed to decrease its working capital by 23.2 percent to €703.2 million at the end of the quarter.

Despite the uncertain situation on the health front, Gulden said Puma will continue investments in new partnerships, such as those it recently signed with the football player Neymar Jr and the NBA player LaMelo Ball.

With the strong third-quarter rise in sales and Ebit, the company is optimistic about its mid- and long-term perspectives. Despite the third quarter’s better-than-expected results, however, it declined to make any forecasts for the year, as the fourth quarter remains mired in uncertainty amid rising Covid-19 infections. However, Gulden noted that he expects the company to be “Ebit positive” for the full year.

The company presented its five objectives for 2021, which include sustainability. Puma presented this year new collections with a focus on eco-friendly materials, including First Mile, which is made with recycled yarn manufactured from plastic bottles collected in the First Mile network. It also implemented cutting-edge dyeing technologies, such as “Dope Dye” and digital printing, to reduce the use of chemicals and water. Puma also pledged to further lower its CO² emissions and limit itself to 75 percent recycled polyester in all apparel and accessories by 2025.

Other objectives include investments in digital to improve the consumer shopping experience, the launch of innovative products and a greater emphasis on women through a new “She Moves Us” marketing platform that will be launched soon. It’s all part of a four-pronged strategy being deployed to cope with the pandemic: survive, recover, stabilize and emerge stronger.