First Half-Year 2019

Sales for the first half-year 2019 rose by 15.5% currency-adjusted to € 2,546.0 million (+16.8% reported). The strong sales development was largely driven by double-digit currency-adjusted growth rates in Asia/Pacific, where China continued to be the main growth driver, and the Americas. EMEA was at a more moderate level with a mid single-digit growth rate. From a product division perspective, the sales growth was driven by double-digit growth in Apparel with an increase of 24.8% as well as in Footwear, which grew by 11.7%. 

Wholesale continued to drive growth with an increase of 13.8% currency-adjusted, supported by a strong performance of our key accounts. PUMA's own and operated retail sales increased by 21.5% currency-adjusted to € 599.6 million including eCommerce. This represented a share of 23.6% of total sales for the first half of 2019 (22.5% in the previous year). The reasons for the rise are a like-for-like sales growth in our own retail stores, the expansion of our retail store network and a continued strong growth of our eCommerce business.

The gross profit margin improved by 80 basis points from 48.4% to 49.2% in the first half of 2019. Positive impacts from channel and product mix, lower discounts and positive currency impacts led to margin improvements.

Operating expenses (OPEX) increased by 16.6% and amounted to € 1,042.3 million. The increase was driven by higher sales related variable costs as well as continued investments in IT-infrastructure, marketing and our own retail business. 

The operating result (EBIT) grew by 31.2% from € 169.8 million last year to € 222.8 million in the first half of 2019 due to a strong sales growth combined with an increased gross profit margin and a slight operating leverage. This led to an improved EBIT-margin of 8.8% compared to 7.8% in the first half last year.

Net earnings rose by 46.3% to € 144.1 million (last year: € 98.5 million). This translates into earnings per share of € 0.96 compared to € 0.66 in the first half of 2018.

Working capital

Inventories were up by 19.4% at € 1,063.3 million due to the general sales growth, more retail stores as well as earlier receipts of products in order to balance supplier capacities and thereby avoid delivery issues. Trade receivables rose by only 11.2% to € 704.7 million. On the liabilities side, trade payables were up by 15.9% to € 740.1 million. This resulted in an increase of working capital by 15.7% to € 792.9 million.

Cashflow

The free cashflow in the first half of 2019 decreased slightly to € -104.4 million (1-6/2018:
€ -97.9 million). This development was a result of higher capital expenditures and an increase of working capital, while earnings before taxes (EBT) improved significantly. In addition, the first-time application of IFRS 16 Leases had a positive effect on the free cashflow. Please refer to the Notes to the Interim Report for a detailed description of the effects of the first-time application of IFRS 16 Leases.

Outlook 2019

The second quarter of 2019 saw a continued strong increase of sales and profitability. As a consequence and based on our expectations for the remainder of the year, we slightly adapt our guidance for the full year 2019. PUMA now expects that currency-adjusted sales will increase around 13% (previous guidance: currency-adjusted increase of around 10%). The gross profit margin is still anticipated to improve slightly (2018: 48.4%) and we continue to expect that operating expenses (OPEX) will increase at a slightly lower rate than sales. The operating result (EBIT) is now expected to come in between € 410 million and € 430 million (previous guidance: between € 395 million and € 415 million). In line with the previous guidance, management expects that net earnings will improve significantly in 2019.

brand and strategy update

With the announcement of several new partnerships, PUMA had an exciting first half of the year 2019.

In Football, PUMA signed its largest deal ever - both in terms of scope and ambition - teaming up with City Football Group, which includes reigning English Premier League champions Manchester City and a total of five teams on four continents. The new 2019/20 kits were successfully launched in July and exceeded any first day sales in the club’s history. In addition to the club, PUMA signed Manchester City’s iconic manager Pep Guardiola as a brand ambassador.
We also announced that in Spain, starting in the 2019/20 season, we will supply the official ball used in all professional matches of LaLiga Santander and LaLiga 1|2|3. To expand our presence in Spanish club football, we entered a long-term agreement with Valencia CF, one of Spain’s most successful teams.
Together with its existing partnerships, these new deals ensure that PUMA has a title contending presence in each of the key European football leagues.
At the FIFA Women’s World Cup in France, we sponsored quarter finalist Italy and 78 individual players. To celebrate women’s football, PUMA launched the latest evolution of the PUMA ONE football boot as the PUMA ONE Trailblazer, exclusively worn by our leading female players. 

In other Teamsport events, PUMA team Denmark took the title at the Handball World Championships and PUMA athletes Rasmus Lauge from Denmark and Bjarte Myrhol from Norway were named part of the event’s All-Star team. Beyond that, PUMA team New Zealand won the Women’s Netball World Championships in Liverpool.

In Track & Field, PUMA is already getting ready for the Olympic Games in Tokyo in 2020 and added several new athletes to its roster: world champion 400m hurdler Karsten Warholm, rising pole vault star Armand Duplantis, 2019 NCAA 100m and 200m champion Divine Oduduru, 2019 NCAA 100 meter hurdles champion Janeek Brown, long-jumper and sprinter Blessing Okagbare, high jumper Naoto Tobe and the Portuguese Athletics Federation.

In Motorsport, PUMA entered into a long-term contract with Porsche to become the exclusive technical partner for racing gear as well as shoes, caps and luggage. As part of our vision to bring the track to the street, PUMA launched a separate collaboration with Porsche Design, for co-branded footwear, apparel, and accessories, aimed at the higher end of the market.
We also partnered with W Series, the first racing competition for women, supplying high-performance racewear for all drivers.
Our athletes continued to perform well at the pinnacle of Motorport, as PUMA teams won two of the most prestigious races on the calendar: Lewis Hamilton in the Mercedes AMG Petronas won the Formula 1 Monaco Grand Prix and Simon Pagenaud of Team Penske claimed victory at the Indianapolis 500.
Adding to its leading offering in Motorsport, PUMA became the official trackside retail partner for Formula 1.

PUMA’s first full NBA Basketball season after the company’s return to the sport last year saw the Toronto Raptors shooting guard Danny Green become the first PUMA athlete to win the NBA Championship since Isiah Thomas in 1990.
PUMA launched its debut basketball shoe, the Clyde Court, in several new colorways as well as its second performance basketball shoe, the Uproar. Both products were highly visible throughout the NBA Season, the All-Star Game, the Playoffs, and the NBA Finals. In addition, we brought back a key heritage basketball style: the Ralph Sampson. The Ralph Sampson is a shoe with street style appeal and the initial response was very encouraging.

In Golf, PUMA’s latest signing Gary Woodland won the US Open as his first major title and created a lot of media echo with his “star-spangled” IGNITE PWRADAPT golf shoes.

In Sportstyle, the RS-X franchise continues to be a bestseller within the “chunky shoe category”, supported by the launch of the RS-X Trophy at the beginning of the year as well as by collaborations with MTV and Motorola. The Cali and Cali Bold, presented by PUMA’s ambassador Selena Gomez, were also among PUMA’s best-selling franchises in the first half of the year.

On the operational side, we continued to invest in our distribution and logistical network as well as in organizational processes. In the first six months of 2019, PUMA added 33 (net) owned and operated retail stores while in China, our partners opened around 200 new PUMA retail locations. In August, we will open our New York flagship store on Fifth Avenue, which will be another milestone for our company. At the beginning of the year, we started working on our new multichannel distribution center in Geiselwind, Germany. Construction is on track and the center is expected to be operational in early 2021. In addition, PUMA North America announced the opening of a new distribution hub just outside of Indianapolis for 2020.

Download the Media Kit below to get the Press Release (PDF) and image.

Have a look at our Financial Calendar for the Full Year 2019

Fourth Quarter 2019

Sales

PUMA's strong sales growth continued in the fourth quarter of 2019. Sales increased by 20.6% reported to € 1,478.6 million (+18.3% currency adjusted). All regions and all product divisions contributed with double-digit increases. Sportstyle, Running and Training as well as Motorsport were the categories with the highest growth rates.

Gross Profit Margin and Operating Expenses

The gross profit margin improved to 47.3% in the fourth quarter (last year: 47.1%). Small positive mix effects as well as slightly positive currency effects led to margin improvements.

Operating expenses (OPEX) rose by 19.4% to € 650.6 million in the fourth quarter. The increase was mainly caused by higher sales-related costs, including logistics costs as well as higher marketing and retail investments.

Operating Result and Net Earnings

The operating result (EBIT) increased by 46.8% from € 37.6 million last year to € 55.2 million due to a strong sales growth combined with an improved gross profit margin and operating leverage.

Net earnings increased by 55.0% from € 11.5 million to € 17.8 million and earnings per share were up from € 0.08 in the fourth quarter last year to € 0.12 this year.

Full Year 2019

Sales

PUMA's sales increased by 18.4% reported in the financial year 2019 (+16.7% currency adjusted). All regions and product divisions contributed with double-digit growth.
    
In the EMEA region, sales rose by 11.2% reported to € 2,001.4 million (+11.2% currency adjusted). As a result, the EMEA region exceeded the two billion Euro sales mark for the first time. The main growth drivers were Germany, Spain, Russia, and Turkey.

In the Americas region, sales increased by 20.6% reported to € 1,944.0 million. Currency adjusted sales increased by 17.9%. Both North America and Latin America contributed with double-digit growth rates. Currency exchange effects for North America were positive, while especially the weakness of the Argentinian Peso led to a negative currency effect on sales for Latin America.  

The Asia/Pacific region delivered the strongest sales growth of 26.0% reported to € 1,556.9 million. This corresponds to a currency adjusted increase of 22.8%. Growth in the region was mainly driven by China and India.

In the Footwear division, sales increased by 16.8% reported to € 2,552.5 million. Currency adjusted sales increased by 15.6%. The strongest growth was achieved in the Sportstyle, Running and Training, and Motorsport categories.

In the Apparel division, sales increased by 22.6% reported to € 2,068.7 million (+20.5% currency adjusted) and was also driven especially by strong growth in Sportstyle, Running and Training as well as Motorsport categories. As a result, sales in the Apparel division exceeded the two billion Euro sales mark for the first time.

The Accessories division showed a sales increase of 13.5% reported to € 881.1 million. This corresponds to a currency adjusted sales growth of 11.1%. Higher sales of legwear, bodywear and Cobra golf clubs contributed to the increase.

Wholesale continued to drive growth with an increase of 15.0% currency adjusted, supported by a strong performance of our key accounts. PUMA's direct-to-consumer sales (owned and operated retail stores and eCommerce) increased by 22.0% currency adjusted to € 1,395.3 million. This was driven by like-for-like sales growth in our own stores, the expansion of our retail store network and a continued strong growth of our eCommerce business. Direct-to-consumer sales represented a share of 25.4% of total sales in 2019 compared to 24.3% in 2018. 

 

Gross Profit Margin and Operating Expenses

PUMA's gross profit in the financial year 2019 increased by 19.4% from € 2,249.4 million to € 2,686.4 million. The gross profit margin improved by 40 basis points from 48.4% to 48.8%. The main drivers were product mix, regional mix, channel mix as well as a slightly positive currency effect. Gross profit margin improved in Footwear from 45.8% in 2018 to 46.4% in 2019, in Apparel from 50.9% to 51.1% and in Accessories from 50.3% to 50.5% respectively.

Operating expenses (OPEX) increased by 17.8% and amounted to € 2,271.3 million. The increase was driven by higher sales-related variable costs as well as costs related to IT infrastructure, marketing and our own retail business. The OPEX ratio in percent of total sales decreased from 41.5% in 2018 to 41.3% in 2019. 


Operating Result and Net Earnings

The operating result (EBIT) improved by 30.5% from € 337.4 million in 2018 to € 440.2 million in 2019. This was slightly above the upper end of the revised EBIT guidance of € 420 million to € 430 million. This result was achieved through strong sales growth combined with a higher gross profit margin and operating leverage. EBIT margin went up from 7.3% in 2018 to 8.0% in 2019.

Despite the additional interest expense of € 29.7 million related to the new accounting standard for leases (IFRS 16), the financial result improved slightly from € -24.0 million in 2018 to € -22.6 million in 2019). This positive development is primarily the result of gains from currency conversion differences of € 10.2 million in 2019, compared to a loss from the currency conversion of € -14.4 million last year. 

The tax rate for the full year 2019 amounted to 26.0% compared to 26.7% last year and the total tax expense increased from € 83.6 million in 2018 to € 108.6 million in 2019.

Net earnings rose by 40.0% from € 187.4 million last year to € 262.4 million in 2019. This translated into improved earnings per share of € 1.76 compared to € 1.25 in 2018, considering the 1:10 stock split.

Working Capital

Despite the significant growth in sales and an increased number of own retail stores, working capital rose only by 9.0% from € 503.9 million to € 549.4 million. Inventories grew by 21.3% from € 915.1 million in 2018 to € 1,110.2 in 2019. Earlier purchase of products to balance supplier capacities and secure product availability, more retail stores and the expected sales growth led to the increase. Trade receivables rose by 10.5% from € 553.7 to € 611.7 million due to active receivables management. On the liabilities side, trade payables increased by 19.6% from € 705.3 million to € 843.7 million, mainly related to purchases of product.

CashFlow

The free cash flow (before acquisitions) improved by € 181.8 million  to € 331.2 million in 2019. This development was a result of considerably higher earnings before taxes (EBT € +104.2 million) and the only moderate increase in working capital. In addition, the first-time application of the new lease accounting standard (IFRS 16) in the financial year 2019 had a positive effect of € 170.5 million. Without this positive effect, the free cash flow (before acquisitions) in 2019 would have improved by € 11.3 million, despite a significant increase of investments in fixed assets of € 88.2 million in 2019 compared to last year. Please refer to the Notes to the Consolidated Financial Statements, chapter 1 General, for a detailed description of the effects of the first-time application of IFRS 16 Leases.

As of December 31, 2019, PUMA’s cash position amounted to € 518.1 million compared to € 463.7 million at the balance sheet date last year.

Proposal of a Dividend of € 0.50 per share

Based on PUMA’s continued positive business development in 2019 with an improvement of profitability and cash flow, the Management Board and the Supervisory Board of PUMA SE will propose to the Annual General Meeting on May 7, 2020, a dividend of € 0.50 per share for the financial year 2019 (last year € 0.35). This represents a payout ratio of 28.5% as a percentage of net earnings, in line with PUMA SE's dividend policy, which foresees a payout ratio of 25% to 35%.


 

Brand and Strategy Update

In 2019, PUMA continued to work hard towards our ambition of becoming the fastest sports brand in the world. To further strengthen our sports performance positioning we entered into many new partnerships with internationally renowned football clubs and increased the brand’s visibility at key sports events globally through great performances of our sponsored athletes and teams. 

PUMA has set out six strategic priorities: brand heat, a competitive product range, a leading offer for women, improving our distribution quality, organizational speed and building our sports performance credibility in the US through our re-entry into Basketball.

In our Teamsport category, 2019 started with a big announcement, as we launched our partnership with Manchester City in February. This deal is PUMA’s largest ever, both in terms of scope and ambition. We were also excited to welcome Pep Guardiola, one of the most celebrated football managers in the world, as a brand ambassador.

In Spain, we signed Valencia CF, one of the most respected clubs in Spanish football. We also became the official match ball partner of Spanish football league LaLiga Santander and LaLiga 1|2|3. All goals in one of Europe’s strongest professional football leagues are scored with the PUMA LaLiga 1 football.

PUMA is now in the position to have a title-contending presence in all major football leagues and with the national teams of Egypt and Morocco recently joining the PUMA family, we now sponsor 12 federations.

One of the highlights of the football year was the Women’s World Cup in France, during which PUMA sponsored team Italy and 78 PUMA players ensured high visibility for the brand.

Our PUMA teams and athletes were also successful in other teamsport events around the globe such as Handball, Netball, Australian Rules Football, Cricket, and Rugby.

The World Athletics Championships in Doha were an important event for our track and field athletes. PUMA was highly visible during the competition, as we supported a total of 115 athletes and twelve national federations. Norwegian hurdler Karsten Warholm successfully defended his title over 400m hurdles and was later voted European Male Athlete of the Year. During the competition 22 medals were won by athletes wearing PUMA.

In June of 2019, PUMA signed rising pole vault star Armand “Mondo” Duplantis, a partnership that already proved very successful. The US-born Swede broke the world record twice in early 2020, most recently setting it at 6 meters 18 at the World Athletics Indoor Tour in Glasgow.

 
PUMA also welcomed new partners in Motorsport. We signed a long-term agreement with Porsche as well as a separate collaboration with Porsche Design to create premium lifestyle products.

Our Formula 1 teams Mercedes AMG Petronas, Scuderia Ferrari and Aston Martin Red Bull Racing once again dominated the Formula 1 season, where PUMA further expanded its leading presence by becoming the official trackside retail partner for F1 race weekends. Our brand ambassador Lewis Hamilton was crowned Formula 1 Champion for the sixth time.

PUMA also partnered with W Series, the first racing competition for upcoming female talent in motorsport.

In our Golf category, we celebrated the 10-year anniversary with golf ambassador Rickie Fowler, one of the most vibrant ambassadors of the brand. The latest addition to our roster of golf players, Gary Woodland, won the US Open in June.
 
In PUMA’s first full NBA Basketball season - after our return to the sport in 2018 - Toronto Raptors shooting guard Danny Green was the first PUMA athlete to win the NBA Finals since Isiah Thomas in 1990. With the support of JAY-Z, our Creative Director for basketball, we continued to launch additional performance basketball shoes including the UPROAR and the CLYDE HARDWOOD. We also signed new highly talented NBA players such as RJ Barrett (New York Knicks), Kyle Kuzma (Los Angeles Lakers) and Marcus Smart (Boston Celtics). Our products were very visible on court throughout the NBA Season, the All-Star Game, the Playoffs and the NBA Finals.

Only last week, we also signed a multi-year partnership with Grammy-winning recording artist J. Cole, a brand ambassador who combines basketball, fashion and music culture.

One of our most successful Footwear styles in 2019 was the RALPH SAMPSON, a classic basketball silhouette. This shows that were are generating credibility in basketball, which we leverage into other categories. In the “chunky”-shoe category, the RS-X-franchise continued to resonate well with our customers. The CALI franchise, presented by PUMA’s ambassador Selena Gomez, continued to do well within the women’s lifestyle category. Other key styles included the PUMA FUTURE football boot and running & training shoes based on our LQD CELL and HYBRID technology platforms. In the fourth quarter, we launched the RS-X3, CALI SPORT and the RIDER, which is inspired by one of the jogging shoes launched in the 1980s. With these models, we see ourselves in a good starting position for 2020. 

Our women’s brand ambassadors contributed with individual collections in 2019: Selena Gomez launched her second collection. Cara Delevingne teamed up with PUMA and French luxury fashion house Balmain, while Adriana Lima presented a line of boxing inspired styles. Overall, we saw strong growth across our Apparel portfolio, especially from “Big Cat” logo applications and motorsport.

As eSports is becoming increasingly relevant for our consumers, PUMA announced its first-ever partnership in virtual sports with eSports team cloud9. We also for the first time created products specifically around the needs of eSports athletes and gamers, such as an active gaming seat andgaming shoe. Through these partnerships, we are in a position to benefit from the fast-growing gaming and eSports markets. 
Our first smartwatch launched in partnership with Fossil Group and Qualcomm helps athletes train, stay motivated, track goals and connect with others while on the go.

In August, we opened our New York flagship store on Fifth Avenue, which provides a deeply immersive brand experience. Customers can find the latest PUMA products, race down the streets of NYC in our Formula 1 race simulators, test the latest PUMA football boots in a virtual San Siro Stadium or personalize their shopping in our customization studio.

On the operational side, we continued to invest in our distribution and logistics network. The construction of our new highly automated multichannel distribution center in Geiselwind, Germany is largely finished and the installation of the intralogistics system has started. Geiselwind is expected it to be operational in early 2021 as planned. In addition, PUMA North America announced the opening of a new also highly automated distribution hub just outside of Indianapolis for 2020.

In addition to our business priorities, social, economic and environmental sustainability remains a core value for PUMA. In 2019, we already achieved 9 out of our 10FOR20 sustainability targets and developed our next set of targets for 2025, which will be announced in 2020. We continued our leading role in the Fashion Charter for Climate Action under the umbrella of UN Climate and joined the Fashion Pact, a global coalition of fashion companies, suppliers and distributors which seeks to make the industry as a whole more sustainable. Our long-standing social compliance program is recognized by the Fair Labor Association and we have been an accredited member since 2007.

Outlook 2020

Our business developed strongly in 2019, both in terms of sales and profitability. We are confident that the positive development will continue in 2020. 
 
For the full year 2020, we therefore expect currency adjusted sales growth of around 10%. We forecast the gross profit margin to show a slight improvement compared to last year (2019: 48.8%) and operating expenses (OPEX) to increase at a slightly lower rate than sales. Based on the current exchange rate levels we expect an operating result (EBIT) for the financial year 2020 in a range between € 500 million and € 520 million (2019: € 440.2 million). We also expect a significant improvement of net earnings in 2020.
 
The corona virus has negatively impacted our business since the beginning of February. This is especially true in China where more than half of both own and operated and partner stores are temporarily closed due to restrictions of the local authorities. Business is further impacted in other markets, especially in Asia, due to decline of Chinese tourism business. We expect this also to have a negative impact on our total Sales and EBIT for the first quarter 2020.
 
The uncertainty regarding the duration of the COVID-19  outbreak and the total impact it could have makes it difficult to forecast the business, but we are currently working under the assumptions that the situation will normalize in the short term and that we then will be able to achieve our full year targets.

Find our Financial Calendar for the Full Year 2020 here.