EQS-News: PUMA SE: PUMA records double-digit Sales growth in Q1
EQS-News: PUMA SE
/ Key word(s): Quarter Results
Q1 2023
PUMA records double-digit Sales growth in Q1 Herzogenaurach, April 26, 2023
2023 First Quarter Facts
Product, Marketing Other Highlights
Arne Freundt, Chief Executive Officer of PUMA SE: “Our Q1 growth was a strong start to 2023. In line with our strategy to be the best partner to retailers, we grew our wholesale business in a challenging environment and further strengthened our performance credibility with strong growth in our strategically important performance categories. Our significant growth in DTC demonstrated PUMA’s continued brand momentum globally, including North America and Greater China.
We benefited from our geographically diversified business, as strong growth in other regions more than offset the decline in North America. The current development of our North American business confirms the importance and necessity of our new strategy to grow more desirable distribution channels and to contain the off-price business in North America as well as to further elevate the brand. It is reassuring that we returned to growth in Greater China after more than two years of declining business and we are cautiously optimistic about an ongoing positive development.
We consider 2023 to be a year of transition. In line with our expectations, the year has started with pressure on gross profit margin and profitability. For the second quarter, we expect low to mid single-digit sales growth due to high inventory levels in the trade and continued headwinds in the market. For the full year, we confirm high single-digit sales growth and EBIT of € 590 to € 670 million. With our continued momentum we are fully on track to normalize our inventory levels and to achieve our full-year guidance.”
First Quarter 2023
Sales increased by 14.4% (ca) to € 2,187.7 million (+14.4% reported). The EMEA region recorded strong sales growth of 25.4% (ca) to € 883.8 million and Asia/Pacific grew 27.4% (ca) to € 476.0 million, supported by a return to growth in Greater China for the first time in two years. Sales in the Americas came in at € 827.9 million (-0.8% ca) due to a decline in North America, while Latin America continued to show strong growth. The decline in North America was due to a lower sell-in to the Wholesale distribution channel, particularly to off-price retailers, as a result of high inventory levels in the market. This development underlines the importance of PUMA’s strategy to reduce its relative dependency on the off-price Wholesale business and the need to strengthen its business with more desirable retailers in North America. While the overall business declined in North America, PUMA continued to show growth in all of its strategic performance categories and its DTC business in North America. PUMA benefited from geographic diversification of its business, as strong growth in other regions more than offset the decline in North America, resulting in a double-digit growth rate for the PUMA Group.
Sales in Footwear were up 28.8% (ca), driven by continued strong demand for our Performance categories like Football, Basketball, Running Training and Golf as well as for the Sportstyle category. Sales in Apparel grew by 1.5% (ca), while Accessories declined by 1.7% (ca), mainly because of softer leg- and bodywear business, especially in North America.
PUMA’s Wholesale business increased by 12.4% (ca) to € 1,722.1 million and the Direct-to-Consumer (DTC) business was up by 22.5% (ca) to € 465.5 million. Sales in owned operated retail stores increased 17.3% (ca) and e-commerce was up 32.7% (ca). The strong growth in DTC, especially in e-commerce, was primarily driven by continued brand momentum and improved product availability. This resulted in an increased DTC share of 21.3% (Q1 2022: 20.1%). The Wholesale distribution channel continued to grow at a double-digit rate despite high inventory levels in the trade. PUMA continues to focus on the Wholesale distribution channel to be the best partner to retailers.
The gross profit margin declined by 70 basis points to 46.5% (Q1 2022: 47.2%). The ongoing industry-wide promotional activity, higher sourcing and freight costs as well as unfavorable currency effects had a negative impact on the gross profit margin. However, the negative effects were partially offset by price adjustments, a favorable geographical and distribution channel mix.
Operating expenses (OPEX) increased by 19.0% to € 848.3 million (Q1 2022: € 712.8 million). The increase was driven by higher sales-related distribution and other variable costs, mainly associated with strong e-commerce growth, a higher number of retail stores in operation as well as higher marketing expenses. As a consequence, the OPEX ratio increased by 150 basis points to 38.8% (Q1 2022: 37.3%).
The operating result (EBIT) decreased by 10.5% to € 175.5 million (Q1 2022: € 196.0 million) and the EBIT margin came in at 8.0% (Q1 2022: 10.3%).
Net income decreased by 3.4% to € 117.3 million (Q1 2022: € 121.4 million) at a lower rate than EBIT due to improved financial result and lower non-controlling interests. The earnings per share amounted to € 0.78 (Q1 2022: € 0.81).
Working Capital
The working capital increased by 74.3% to € 1,751.5 million (March 31, 2022: € 1,004.8 million). Inventories were up by 32.7% to € 2,147.3 million (March 31, 2022: € 1,618.3 million). This represents a further improvement and shows that PUMA is on track to rightsize its inventories – also in North America and Greater China. Trade receivables increased by 13.2% to € 1,276.9 million (March 31, 2022: € 1,128.5 million), which is in line with business growth. On the liabilities side, trade payables increased by 0.6% to € 1,282.7 million (March 31, 2022: € 1,275.0 million).
Outlook 2023
PUMA has successfully started the year with double-digit sales growth in the first quarter of 2023. The growth was based on continued brand momentum, new product launches and our partnership approach along our value chain with athletes, retailers and suppliers. PUMA benefited from strong geographical diversification of its business, as strong growth including Greater China more than offset the market headwinds in North America. At the same time, continued demand for our products and our operational agility allowed us to further rightsize our inventory levels.
While PUMA’s start to 2023 has been successful, the macroeconomic situation and overall uncertainty in the trade remain challenging. Recession fears in various markets, persistently high inflation and elevated interest rates are leading to muted consumer sentiment and volatile demand in retail. In addition, elevated inventory levels in the market contribute to a slower sell-in to the Wholesale channel at the moment.
Based on PUMA's strong start to 2023, continued brand momentum and strong growth across our performance categories, we confirm high single-digit percentage currency-adjusted sales growth and operating result (EBIT) in a range of € 590 million to € 670 million (2022: € 641 million) for the financial year 2023. PUMA’s net income is expected to change accordingly. For the second quarter, PUMA expects low to mid single-digit sales growth due to high inventory levels in the trade trade and continued headwinds in the market.
The development of the gross profit margin and OPEX ratio will largely depend on the extent and the duration of the negative impacts described above as well as the regional and channel mix. Given the timing of these unfavorable factors, we expect the gross profit margin and profitability to be under more pressure in the first half of the year than in the second half. For the full year 2023, PUMA expects currencies, promotional activity and raw material prices to continue to dilute profitability.
PUMA will continue to focus on managing short-term challenges without compromising the mid- and long-term momentum of the brand, as in previous years. Our sales growth and market share gains will have priority over short-term profitability. The exciting product range for 2023 and very good feedback from retailers on our product pipeline for 2024 make us confident for the mid- and long-term success and continued growth momentum of PUMA.
Rounding differences may be observed in the percentage and numerical values expressed in millions of Euro since the underlying calculations are always based on thousands of Euro.
Financial Calendar:
May 24, 2023 Annual General Meeting
July 26, 2023 Interim Report Q2 2023
October 24, 2023 Quarterly Statement Q3 2023
The financial releases and other financial information are available on the Internet at “about.puma.com“.
Media Relations:
Kerstin Neuber – Senior Head of Corporate Communications - PUMA SE - +49 9132 81 2984 - kerstin.neuber@PUMA.com
Investor Relations:
Gottfried Hoppe – Head of Investor Relations Finance Strategy - PUMA SE - +49 9132 81 3157 - gottfried.hoppe@puma.com
Notes to the editors: Reuters: PUMG.DE, Bloomberg: PUM GY, Börse Frankfurt: ISIN: DE0006969603– WKN: 696960
Notes relating to forward-looking statements: This document contains statements about the future business development and strategic direction of the Company. The forward-looking statements are based on management's current expectations and assumptions. They are subject to certain risks and fluctuations as described in other publications, in particular in the risk and opportunities management section of the combined management report. If these expectations and assumptions do not apply or if unforeseen risks arise, the actual course of business may differ significantly from the expected developments. We therefore assume no liability for the accuracy of these forecasts.
PUMA is one of the world’s leading sports brands, designing, developing, selling and marketing footwear, apparel and accessories. For 75 years, PUMA has relentlessly pushed sport and culture forward by creating fast products for the world’s fastest athletes. PUMA offers performance and sport-inspired lifestyle products in categories such as Football, Running and Training, Basketball, Golf and Motorsports. It collaborates with renowned designers and brands to bring sport influences into street culture and fashion. The PUMA Group owns the brands PUMA, Cobra Golf and stichd. The company distributes its products in more than 120 countries, employs about 20,000 people worldwide and is headquartered in Herzogenaurach/Germany. For more information, please visit https://about.puma.com.
26.04.2023 CET/CEST Dissemination of a Corporate News, transmitted by EQS News - a service of EQS Group AG. |
Language: | English |
Company: | PUMA SE |
PUMA WAY 1 | |
91074 Herzogenaurach | |
Germany | |
Phone: | +49 9132 81 0 |
Fax: | +49 9132 81 42375 |
E-mail: | investor-relations@puma.com |
Internet: | www.puma.com |
ISIN: | DE0006969603 |
WKN: | 696960 |
Indices: | MDAX |
Listed: | Regulated Market in Frankfurt (Prime Standard), Munich; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Stuttgart, Tradegate Exchange |
EQS News ID: | 1617009 |
End of News | EQS News Service |
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1617009 26.04.2023 CET/CEST
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