Puma Breaks 5 Billion Euros Sales Barrier
Puma confirmed 2019 as a record-breaking year at a press conference in the company’s hometown of Herzogenrath in western Germany today. The firm reported an 18.4 percent increase in sales to 5.5 billion euros.
The third-largest sportswear company in the world also achieved an increase of 30.5 percent in EBIT — earnings before income and taxes — bringing these to 440 million euros. Good results had been expected and chief executive officer Bjorn Gulden had already raised guidance twice during the year, although these figures surpassed his predictions, which are traditionally conservative. He had already said he expected growth of 15 percent to make EBIT of 420 million euros.
“2019 ended with a very strong fourth quarter for us,” Gulden said in a statement. “All regions and all product divisions were up by double digits. This made 2019 the best year in Puma‘s history.”
The results make Puma the most dynamic among its much bigger competitors. Nike has reported growth under 8 percent and Adidas is expecting about the same.
In the final quarter of the year, Puma’s sales increased 20.6 percent to add almost 1.5 billion euros to the company’s coffers. Puma’s best results came from the all-important European territory with growth of 23.2 percent there, bringing full-year sales there to 2 billion euros. Germany, Spain, Russia and Turkey were the strongest markets.
But for the full year, most growth was in the Asia-Pacific region, with increases of 22.8 percent driven by turnover in China and India, bringing total sales to 1.55 billion euros in 2019. The company also succeeded in its efforts to make inroads in the Americas, where sales increased 20.6 percent to hit 1.94 billion euros.
Puma also reported double-digit growth in all sectors of the business, with apparel growing the most, with currency adjusted sales up 20.5 percent to bring the category to just over 2 billion euros. Footwear was the best seller in the last quarter of 2019 and grew 15.6 percent, currency adjusted, for the full year to 2.55 billion euros. In both of those sectors, the category Sportstyle was Puma’s most successful, followed by Running and Training and motorsports.
Expect more of the same next year, the company said in its 2019 management report, released the same day. Puma’s ongoing strategy involves a further push into Sportstyle, with the likes of brand ambassadors Selena Gomez and Cara Delevingne and footwear that speaks to current trends. In 2019, Puma’s bestsellers in the latter category were the chunky RS-X and the more retro Cali and Ralph Sampson styles.
In 2019, Puma also completed its first full season in U.S. basketball, with the help of Jay Z, the brand’s creative director for basketball. Gulden has long-term plans to compete with Nike in North America and has previously said Puma’s basketball offerings are about attracting trendy, younger shoppers.
On Wednesday, Puma was predicting sales growth of around 10 percent and EBIT of between 5 billion and 5.2 billion euros for the coming year. Analysts at Baader Bank, RBC Europe, JPMorgan and Jefferies investment bank all agreed with that positive forecast, although some expressed worries about the next two quarters due to the impact of the COVID-19 virus in China.
Puma’s share price had gained around 60 percent in value during 2019, reaching a high of 79 euros in January and making it one of the most successful companies on the German stock exchange. But just like at Adidas and Nike, Puma’s shares fell mid-January, on the back of market fears about the COVID-19 virus.
COVID-19 is having a big impact on first quarter business already, Gulden admitted. Puma has had to shut about half its stores in China due to the virus and also reported fewer sales from tourism in Asia as Chinese shoppers stayed home. If stores remain closed for longer than the next month, guidance for 2020 might be impacted, he said. Asia-Pacific sales made up about 28.3 percent of Puma’s total sales in 2019, with Greater China adding the most to that number.
“Given the current uncertainty around the virus, it is of course impossible to forecast its impact on the business,” Gulden said. “We will do everything we can in the short term to minimize the damage and remain very positive in the long term.”
Puma canceled all February events in China but said they had yet to report serious issues or major delays with suppliers. Around 25 percent of Puma’s sourcing is done in China although Vietnam provided around 33 percent in 2019 and remains the most important site for production.
This coming year, Puma will benefit from a major soccer tournament, the 2020 UEFA European Football Championship, at home and the Olympics in Tokyo. The German manufacturer wants to double its stake on the soccer field by 2022 and already has contracts with top European teams like AC Milan and Borussia Monchengladbach.
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