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