Puma, now that its most “challenging” quarter of the year is over, is forecasting sequentially improving trends for the remainder of 2024. Stronger sales growth is projected in H2 as the commercialization of developing product trends and impact of the company’s accelerated brand elevation strategy take hold.
“We are focusing our efforts on building the foundation for the next chapter of growth based on increased brand desirability,” commented CEO Arne Freundt. That work has focused on solidifying the brand’s credibility in the performance segment, developing new franchises in the Sportstyle arena, and launching Puma’s first global brand campaign in a decade.
Despite a still volatile marketplace in many corners of the globe, the group’s Q1 results were in line with its expectations. Group Ebit fell by 9.4 percent to €159.0 million from €175.5 million in the period ended March 31. Net income slipped by 25.5 percent to €87.7 million from €117.3 million, but gross margin improved by 100 basis points to 47.5 percent despite 300 basis points of negative pressure from currency fluctuation due to positive impact from lower sourcing and freight expense and a favorable product and distribution channel mix. Year-over-year inventories were down by nearly 17 percent to €1,785.6 million at period end.
| Puma - Income | |||
|---|---|---|---|
| Q1 (€ million) | |||
| 2024 | 2023 | Change | |
| Sales | 2,102.3 | 2,187.7 | -3.9% |
| Cost of sales | 1,103.3 | 1,170.7 | -5.8% |
| Gross profit | 999.0 | 1,016.9 | -1.8% |
| Royalty and commission income | 5.2 | 6.9 | -24.6% |
| Other operating income and expenses | -845.3 | -848.3 | 0.4% |
| Operating result (EBIT) | 159.0 | 175.5 | -9.4% |
| Financial result | -26.8 | -7.8 | -243.6% |
| Pre-tax (EBT) | 132.2 | 167.7 | -21.2% |
| Tax | 33.0 | 41.9 | -21.2% |
| Net income | 87.3 | 117.3 | -25.6% |
| Diluted EPS | 0.58 | 0.78 | -25.6% |
| Source: Puma | |||
Reported Q1 sales declined by 3.9 percent to €2,102.3 million but up by 0.5 percent on a currency-adjusted basis when accounting for about €100 million of currency impact. Wholesale revenues dipped by 2.9 percent currency-adjusted to €1,608.1 million as the company continued to focus on prudent sell-in to improve inventory levels. Direct-to-consumer sales, meanwhile, increased by 13.5 percent to €494.2 million despite scaled-back promotions.
By product segment on a currency-adjusted basis, footwear sales rose by 3.1 percent in Q1 to €1,181.5 million, but apparel sales declined by 2.4 percent to €608.1 million and accessories revenues contracted by 3.2 percent to €312.7 million. Geographically, Q1 sales in the Americas were up by 1.0 percent to €790.0 million; flat in the EMEA at €855.7 million; and slightly higher year-over-year in Asia/Pacific at €456.6 million.
| Puma - Sales | ||||
|---|---|---|---|---|
| Q1 (€ million) | ||||
| 2024 | 2023 | Change | Change (currency adjusted) | |
| By region | ||||
| EMEA | 855.7 | 883.8 | -3.2% | 0.0% |
| Americas | 790.0 | 827.9 | -4.6% | 1.0% |
| Asia-Pacific | 456.6 | 476.0 | -4.1% | 0.6% |
| Total | 2,102.3 | 2,187.7 | -3.9% | 0.5% |
| By product division | ||||
| Footwear | 1,181.5 | 1,210.4 | -2.4% | 3.1 |
| Apparel | 608.1 | 647.7 | -6.1% | -2.4 |
| Accessories | 312.7 | 329.5 | -5.1% | -3.2 |
| Total | 2,102.3 | 2,187.7 | -3.9% | 0.5 |
| Source: Puma | ||||
As Puma continues working on raising its brand profile with consumers from Boston to Beijing, it is doing so with a raised product focus on both performance and Sportstyle. There are new products in the soccer, basketball, and running pipelines, including the new Deviate Nitro Elite 3 and the Le Francé, the first signature lifestyle shoe from brand endorser Lamelo Ball in basketball. Meanwhile, for increased brand visibility in all major sporting events, including the upcoming Olympics in Paris, all Puma athletes will don the ‘Fireglow” color in their respective performance shoe category.
Within the Sportstyle segment, the group is transitioning from older franchises as it creates and launches new ones. That effort includes a continued focus on the terrace shoe concept, which will feature the Palermo in a myriad of color options for her, the Q2 launch of the Easy Rider, and a continuation of skate concepts with the Suede XL as a new style.
“The market seems ready for the low-profile (offerings) ahead of what we thought, commented Freundt, adding both retail behemoths in JD Sports and Foot Locker have bought into the concept that will include the yet-to-be-launched Speedcat, Mostro and Inhale styles.
