Puma eyes more gains after record FY22

Under new CEO Arne Freundt, Puma has established numerous brand and company priorities for 2023 after reporting record annual sales and Ebit in FY22. While forecasting a “normalization” of market conditions in the U.S. and China this year, the group predicts high-single-digit revenue growth and an Ebit range of €590 to €670 million versus €641 million in FY22. After three years of “crisis mode” operations, Puma sees potential tailwinds and headwinds in its business this year. A stabilized supply chain, lower freight costs and the end of the zero-Covid policy in China are seen as positives, with geopolitical tensions fueled by the war in Ukraine and muted consumer sentiments as potential negatives. 

In China, where Puma is introducing a new store format as foot traffic rates begin to improve, a key priority will focus on enhancing the brand’s perception with consumers to tie it more to the brand’s sports heritage. The company is unsatisfied with its current market share in China, where quarterly sales fell by double-digits during every FY22 period, ending down more than 36 percent for the year. Meanwhile, in the U.S., where basketball, soccer, running, and golf are the category priorities, there will be efforts to rebalance the brand’s distribution, increase average selling prices (ASPs), and become more consumer-centric. Puma wants to tap its 75-year-old vault of shoe styles to introduce more of them into the market and build strong franchises around them.

Operating profit declined by 38 percent in Q4 to €40.5 million from €65.0 million as net income slid by 82 percent to €1.4 million from €7.9 million. Accelerated industrywide promotional activity contributed to a 420-basis point decline in gross margin to 44.0 percent. Sales rose by 24.3 percent to €2,196.6 million from €1,767.1 million for the period ended Dec. 31. Regionally, EMEA sales rose by 26.1 percent currency adjusted to €727.1 million on strong growth in nearly all key markets; increased by 29.0 percent in the Americas to €997.6 million; and inched 1.6 percent higher in Asia-Pacific to €471.9 million. By product category, footwear sales increased by 53.3 percent to €1,176.8 million. But apparel and accessories sales fell 1.6 percent to €736.8 million and 5.0 percent to $283.0 million, respectively.

For FY22, Puma’s total revenues reached a record €8,465.1 million versus €6.805.4 million as Ebit lifted 15 percent higher to a record €640.6 million against €557.1 million. Direct-to-consumer sales rose by 7.8 percent currency adjusted to €1,951.4 million last year as the company launched the Puma shopping app and online platforms in the Philippines, Thailand, Peru, Norway, Saudi Arabia and other countries in the Middle East and Africa. Net income rose 14.2 percent year-over-year to €353.5 million from €309.6 million. Annual gross margin dipped by 180 basis points to 46.1 percent due to higher raw material prices and freight increases coupled with a less favorable channel mix and industry promotional activity in Q4.

In the EMEA, annual sales exceeded the €3 billion mark for the first time, rising 23.0 percent to €3113.8 million. Almost all countries in the region, except for Russia and Ukraine, contributed to the increase with double-digit growth rates. Germany, France, Italy, and Turkey were cited for having particularly strong growth.

Footwear sales increased 36.5 percent last year to €4,317.9 million, surpassing the €4 billion mark for the first time, fueled by strong growth in the Sportstyle, Running & Training and Teamsport categories. Annual apparel revenues, aided by Teamsport, Running & Training and Sportstyle offerings, grew 10.1 percent currency-adjusted to €2,896.3 million. Meanwhile, accessories sales rose 5.4 percent currency-adjusted to €1,251.0 million.