First Quarter 2020

PUMA started the year with a very positive order book for 2020, with strong and balanced growth in all regions. In China, after a good start to the year with double-digit growth in wholesale, e-commerce and owned and operated stores, the Chinese market shut down in the last week of January. Over the next six weeks, the whole business in China, except for e-commerce, basically disappeared. As China started to recover in mid-March, COVID-19 had started to spread globally and by the end of the month basically 80% of PUMA’s retail doors, both owned and operated as well as partner stores, were closed. As a result, PUMA's sales declined in the first quarter of 2020 by 1.3% currency adjusted to € 1,299.8 million (-1.5% reported). China, Japan and Korea were the most severely impacted countries and led to a decline of first quarter sales in the Asia/Pacific region of 12.0% currency adjusted. The EMEA and Americas regions, having been negatively impacted since March 2020, still showed a slightly positive sales development in the first quarter, increasing by 3.5% and 3.1% currency adjusted respectively.

In terms of product divisions, Footwear grew by 1.9% in constant currency while Apparel and Accessories were down 6.3% and 0.2%.

Both wholesale and retail channels were significantly impacted by the store closures instructed by local authorities around the globe. At the end of the first quarter, almost all of our owned and operated retail stores as well as the stores of our retail partners were closed. Our sales in e-commerce grew around 40% in the first quarter.

The gross profit margin in the first quarter decreased by 140 basis points from 49.0% to 47.6%. This development was mainly caused by negative currency impacts, lower sales in China, inventory devaluation and return provisions.

Operating expenses (OPEX) rose by 8.3% to € 553.3 million in the first quarter (last year: 
€ 510.7 million). The increase was mainly due to sales and marketing costs to support the originally expected sales growth. In addition, higher costs in our e-commerce business and more retail expenses caused by a higher number of owned and operated stores also contributed to the increase. Actions taken to reduce the cost base only had a limited impact in the first quarter.

Due to the negative impact of COVID-19 on our business, the operating result (EBIT) decreased by 50.1% from € 142.5 million to € 71.2 million in the first quarter of 2020.

Net earnings went down by 61.6% from € 94.4 million last year to € 36.2 million in the first quarter of 2020. As a consequence, earnings per share decreased from € 0.63 to € 0.24.

Working Capital

An increased number of own retail stores and the loss of sales due to the negative impact of COVID-19 has led to an increase of inventories of 24.5% to € 1,129.9 million. Trade receivables declined by 12.6% to € 672.0 million. On the liabilities side, trade payables increased by 32.7% to € 742.3 million, mainly related to the higher product purchases, but also due to the deferral of payments. In total, working capital decreased by 6.9% to 
€ 788.7 million (last year: 846.9 million). In May 2020, PUMA  secured a new revolving credit facility of € 900 million through a banking consortium of twelve banks, including a direct participation of the Kreditanstalt für Wiederaufbau (KfW) of € 625 million.

Outlook 2020

We see an improvement in APAC, where especially China and South Korea are recovering; and we see the first stores opening again in some of the European countries. The distribution in Americas is still almost fully shut down. E-commerce is growing at a very high rate, but this growth cannot in any way compensate for the revenue loss in the other channels.

Given that a large proportion of the global sports and sports lifestyle distribution is currently closed, that consumers are still concerned about their health and safety and that we at PUMA are currently achieving only about 50% of normal revenue, we expect the financial performance in the second quarter to be worse than in the first quarter. The development over the coming weeks and months is so unpredictable that we cannot provide a reliable financial outlook for the full year 2020.

PUMA’s mantra is to manage the crisis short term without hindering the mid term momentum. 2020 is and will continue to be a difficult year, where the goal for PUMA is to survive, recover and then emerge stronger with growth again. Different markets will go through these phases at different times and execution therefore must be very locally driven. Management expects all markets to recover by the end of the year and 2021 to be a year of growth again. The industry is expected to be in a strong position after the crisis. People have already now started doing more sports wherever it is possible, even under difficult circumstances. There are many indications that health and sports will be even more important than before the crisis. The casualization trends and the influence of sports brands are also expected to strengthen further. PUMA is well positioned to continue its growth and will continue to invest in full new product ranges for 2021.

Fourth Quarter 2020

Sales in the fourth quarter of 2020 increased by 9.1% (ca) to € 1,520.1 million (+2.8% reported), despite COVID-19 related lockdown measures. This growth was led by a strong sales increase in Asia/Pacific (+11.8% ca), driven by Greater China. The positive development was also supported by EMEA (+9.8% ca), despite COVID-19-related lockdown measures in Europe as of November. In addition, the Americas showed a good performance (+6.1% ca) with growth across North and Latin America. All product divisions contributed to the growth. Apparel grew 15.7% (ca), driven by continued strong demand for our products. Accessories was up 7.3% (ca), mainly due to a strong golf, leg- and bodywear business. Footwear increased 3.8% (ca) including sustained momentum in Basketball.
PUMA’s Wholesale business increased by 4.6% (ca) to € 1,018.1 million, despite lockdowns and store closures in several markets. The Direct to Consumer business (DTC), which includes owned and operated retail stores as well as e-commerce, increased by 19.3% (ca) to € 502.0 million, driven by strong growth in e-commerce of 57.2% (ca). The gross profit margin improved in the fourth quarter by 70 basis points to 48.0% despite negative currency effects. The improvement in gross profit margin was driven by better sell-through, less promotional activity and good inventory management as well as favourable distribution channel and regional mix effects.

Operating expenses (OPEX) in the quarter increased by 2.8% to € 668.5 million due to higher sales-related, warehousing and distribution costs mainly driven by strong increase in e-commerce business, while we continued our overall tight cost control.

The operating result (EBIT) in the fourth quarter increased by 14.6% to € 63.3 million (last year: € 55.2 million) due to sales growth combined with a higher gross profit margin. This resulted in an improved EBIT margin of 4.2% in the fourth quarter of 2020 (last year: 3.7%).
Net earnings increased by 38.8% from € 17.8 million to € 24.7 million and earnings per share were up from € 0.12 in the fourth quarter of 2019 to € 0.16 in the fourth quarter of 2020.

Full Year 2020

PUMA started the year with a very positive order book for 2020 with strong and balanced growth in all regions. In China, after a good start to the year with double-digit growth in wholesale, e-commerce and owned and operated stores, the Chinese market shut down in the last week of January. Over the following six weeks, the whole business in China, except for e-commerce, basically disappeared. As China started to recover in mid-March, COVID-19 spread globally and by the end of the month around 80% of PUMA’s owned and operated retail stores and the majority of our retail partners’ stores were closed. As a result, sales in April declined sharply by 55% compared to the previous year. With an increasing number of stores reopening over the course of May, first in EMEA and Asia/Pacific and later in North America, sales improved in May, but remained 38% below the previous year. More store openings in June and a generally more positive sentiment led to a substantial improvement and a monthly sales decline of only 6%. At the end of June, 85% of PUMA’s owned and operated stores were open.

In the third quarter, the business environment continued to improve. Sales grew by 13.3% (ca) and developed better than expected, led by a very strong recovery in the Americas and EMEA, making it the best quarter in PUMA’s history. Most of the retail stores - owned and operated as well as those of our retail partners - were open throughout the quarter, but still limited by many local restrictions. While store traffic remained below last year’s levels, conversion rates continued to be high.

The fourth quarter started with very strong sales growth in October. However, throughout November lockdown measures were implemented across multiple countries in Europe and consequently around 35% of PUMA’s owned and operated retail stores in Europe had to close temporarily. This trend continued in December with up to 50% of the retail stores that sell our products in Europe being closed as required by local authorities. Despite the lockdown measures across Europe and other parts of the world, sales in the fourth quarter remained resilient with a growth of 9.1% (ca). The growth was led by a strong sales increase in Asia/Pacific, mainly driven by Greater China. In addition EMEA and Americas showed a positive performance with high single-digit sales increases.

Overall, sales in the financial year 2020 decreased by 1.4% (ca) to € 5,234.4 million (-4.9% reported) due to the negative COVID-19 impact. In the EMEA region, sales grew by 1.5% (ca) to € 1,982.9 million (reported: -0.9%). In the Americas region, sales declined by 3.0% (ca) to € 1,775.2 million (reported: -8.7%). Despite growth in Greater China, sales in the Asia/Pacific region declined by 3.2% (ca) to € 1,476.3 million. Sales in Footwear were down by 3.1% (ca) and in Apparel by 1.5% (ca), while sales in Accessories grew by 3.5% (ca).

The Wholesale business in the financial year 2020 decreased by 4.0% (ca) to € 3,809.9 million. PUMA's Direct to Consumer business (DTC), which includes owned and operated retail stores as well as e-commerce, increased by 6.4% (ca) to € 1,424.5 million. This represented a share of 27.2% in 2020 (last year: 25.4%). The e-commerce business increased strongly by more than 60% (ca), supported by higher investments into performance marketing, better content, successful promotions and more efficient logistics.

PUMA's gross profit margin declined by 180 basis points from 48.8% to 47.0% in the financial year 2020. The main drivers were negative currency impacts and a very promotional environment during parts of the year due to the impact of COVID-19. Distribution channel and regional mix effects had a slight positive effect on the gross profit margin. In Footwear, gross profit margin declined from 46.4% in 2019 to 45.7% in 2020, in Apparel from 51.1% to 48.5% and in Accessories from 50.5% to 47.0% respectively.

As a result of the cost savings initiated at the end of the first and during the second quarter, operating expenses (OPEX) decreased by 0.3% in the financial year 2020 and amounted to € 2,264.9 million (last year: € 2,271.3 million).

The operating result (EBIT) decreased from € 440.2 million in 2019 to € 209.2 million in 2020 due to the significant negative impact of the COVID-19 pandemic mainly in the first half of 2020.

The financial result decreased from € -22.6 million last year to € -46.8 million in 2020. This development is mainly due to losses from currency conversion in 2020 compared to gains from currency conversion in 2019. In addition, the net interest expense increased from € 32.8 million in 2019 to € 42.9 million in 2020 mainly caused by higher expenses related to cash flow hedging.

In the financial year 2020, PUMA generated a profit before tax of € 162.3 million (last year: € 417.6 million). Tax expenses were € 39.2 million compared to € 108.6 million last year and the tax rate decreased from 26.0% to 24.2% in 2020.

As a consequence, net earnings declined to € 78.9 million (last year: € 262.4 million). This translated into earnings per share of € 0.53 compared to € 1.76 in 2019.

Working Capital

We were able to reduce our working capital by 15.2% from € 549.4 million last year to € 465.8 million as of December 31, 2020. Inventories increased only slightly by 2.5% from € 1,110.2 million to € 1,138.0 million as a result of disciplined buying and good inventory management. Trade receivables increased only slightly by 1.5% from € 611.7 million to € 621.0 million. On the liabilities side, trade payables increased by 11.6% from € 843.7 million to € 941.5 million due to extended payment terms agreed with our suppliers.

Cash Flow and Liquidity Situation

The free cash flow declined from € 330.0 million in 2019 to € 276.0 million in 2020. The decline in 2020 was caused by the drop of earnings before taxes, while improved working capital and lower tax payments as well as lower capital expenditures had a positive impact.
As of December 31, 2020, PUMA’s cash position amounted to € 655.9 million compared to € 518.1 million last year. In addition, the PUMA Group had credit lines totaling € 1,639.1 million available as of December 31, 2020 (last year: € 687.6 million). Unused credit lines amounted to € 1,372.7 million as of the balance sheet date compared to € 514.1 million last year.
In line with our strategic priorities in dealing with the COVID-19 pandemic, we obtained an additional credit line in May 2020 to ensure the financial liquidity of the PUMA Group. This credit line served as an insurance to guarantee sufficient liquidity in a time of unprecedented crisis and uncertainty regarding the duration and impact of the COVID-19 pandemic. The additional syndicated credit line of € 900 million from twelve banks, including a direct commitment from Kreditanstalt für Wiederaufbau (KfW), was already reduced by € 700 million to € 200 million as of December 31, 2020. PUMA refinanced this syndicated credit facility in December 2020 by securing a new promissory note loan of € 250 million and increasing existing credit lines with banks by € 450 million.

 

Events after the balance sheet date

On February 1, 2021, PUMA terminated the remaining syndicated credit facility of € 200 million from twelve banks including KfW. This could be achieved due to PUMA’s financial strength and the increase of other credit facilities as described above.

Proposal of a Dividend of € 0.16 per share

Based on the positive net earnings in 2020, the Management Board and Supervisory Board will propose to the Annual General Meeting on May 5, 2021 to distribute a dividend of € 0.16 per share for the financial year 2020. The payout ratio for the financial year 2020 is 30.3% of the consolidated net earnings and is in line with PUMA SE's dividend policy, which provides for a payout ratio of 25% to 35% of consolidated net earnings. However, the payout is conditional on an overall sound macroeconomic environment.

Brand and Strategy Update

The COVID-19 pandemic presented PUMA with several challenges which affected different parts of our business throughout 2020. We reacted quickly and decisively to these challenges with our mantra being to survive and manage the crisis short-term without hindering our mid-term momentum. In the short-term, our main priority was to ensure the health and safety of our people, mitigate the sales impact wherever possible, secure the supply chain and ensure sufficient financial liquidity and manage costs. At the same time, we continued to invest in the mid- and long-term future of our company.

Therefore, we focused on our six existing strategic priorities: create brand heat, design, develop and produce market-leading product ranges that are right for our consumers, build a comprehensive offer for women, improve the quality of our distribution, increase the speed and efficiency of our organizational infrastructure and strengthen our positioning in the North American market by leveraging our re-entry into the Basketball category. In 2020, we added two further strategic priorities: an even stronger focus on local relevance and increased communication around our long-standing activities in the area of sustainability.

To ensure continued brand heat and momentum in 2020, we invested in strong product ranges for the upcoming seasons and several new athletes, teams and brand ambassadors.

A major highlight within our Teamsport category was the new long-term partnership with football star Neymar Jr., one of the most successful and influential players of his generation.

Neymar Jr. has won several trophies in Brazil, Spain and France as well as the Champions League™ and the Copa Libertadores™. He also won the Olympic Gold Medal with the Brazilian National Team in 2016. He has scored 64 goals in 103 matches for Brazil, making him the second best goal scorer in the history of the Brazilian national team just behind another legendary PUMA player: Pelé. The addition of Neymar Jr. to our roster of world-class assets underlines our continued focus on the football category. Neymar Jr. played his first match in the PUMA KING football boot, which was also worn by PUMA football legends Pelé, Cruyff and Maradona. Neymar Jr. now plays in the newly launched PUMA FUTURE Z 1.1 football boot, which will be also worn by PUMA players James Maddison, Marco Reus and Dzsenifer Marozsán. PUMA continued to grow its portfolio of world-class football teams by signing Dutch club PSV Eindhoven, Ukrainian club Shakhtar Donetsk as well as the national federations of Iceland and Paraguay. In 2020, we also launched the revolutionary PUMA ULTRA football boot, which is worn on-pitch by players like Antoine Griezmann, Sergio Agüero, Harry Maguire and Eugénie Le Sommer and received great feedback from retailers and consumers.

Our Running and Training category benefited from the extraordinary performance of our track and field athletes and the introduction of innovative products.PUMA athlete Armand "Mondo" Duplantis entered the history books by setting a new world record in pole vault. He cleared 6.18 meters at an indoor event in February 2020 and broke the 26-year-old outdoor record by jumping 6.15 meters in September.
To support PUMA’s positioning in track and field, we signed a partnership with the Australian and South African Athletics Federations. PUMA has also signed Jamaican athletes Tajay Gayle, the long-jump World Champion, as well as Omar McLeod, the reigning Olympic Champion in 110m hurdles and the 2017 World Champion over the same distance.
In performance footwear, we keep on moving forward with innovative running & training shoes based on our proprietary NITRO, HYBRID and XETIC technology platforms. We also signed world-leading long distance runners such as Molly Seidel to underline our new ambitions in performance running.

2020 was also a successful year for PUMA’s Golf business which continued to be an important pillar among our performance categories. Especially our innovative COBRA Golf SPEEDZONE drivers and the one length irons enjoyed great popularity throughout the year. Supported by his COBRA Golf equipment, PUMA player Bryson DeChambeau won the U.S. Open.

In Motorsport, PUMA brand ambassador Lewis Hamilton became Formula 1 World Champion for the seventh time, equaling Michael Schumacher's existing record. Among launches of limited SPEEDCAT editions in 2020, PUMA introduced a dedicated women’s collection with the launch of the Mercedes-AMG Petronas F1 Team SPEEDCAT Mid L. The shoe is a great and stylish example of PUMA’s ambition to support gender equality in motorsport.

Creating a leading product offer for women remains a priority for PUMA and we continue our mission to be the most fashion-forward sports brand for the female consumer. In 2020, we evolved our positioning of “PUMA owns the space where the gym meets the runway”, as more and more women take up sports worldwide and athletic wear has long made its way into everyday outfits. We welcomed English singer and songwriter Dua Lipa as our newest women’s brand ambassador, who will appear in important campaigns for the brand in the new year. Canadian model Winnie Harlow joined the PUMA family in early 2020, and already featured in the marketing campaigns for several new footwear styles, including the KYRON and the MILE RIDER. Our existing key footwear franchises such as the PUMA CALI continued to resonate well with the female consumer and showed strong sell-through.

Our return to Basketball was an important step towards increasing our credibility as a sports brand in North America. With the support of JAY-Z, our creative director for Basketball, we continued to develop a strong product offering across Footwear, Apparel and Accessories that resonated well on and off the court. We also signed a multi-year partnership with Grammy-winning artist J. Cole, with whom we developed and launched the basketball shoe RS-DREAMER that sold out immediately. Later in the year, we announced a new partnership with creative director June Ambrose, who will create girls and women’s collections for PUMA Basketball as of 2021. We continued to work with highly talented NBA players and gained great on-court visibility when PUMA players Kyle Kuzma and Danny Green won this year’s NBA Championship with the Los Angeles Lakers. Signing a long-term partnership with LaMelo Ball, one of the top picks of the 2020 NBA draft, further underlines our commitment to the sport. Our Basketball business is also growing beyond the key North American market, with strong sales of our performance basketball product portfolio and basketball-inspired Sportstyle product families such as the RALPH SAMPSON.

While Basketball is especially important for North America, we also focused on ensuring strong local relevance in all our other markets around the world. As the PUMA brand and products continue to resonate well around the world, we see an increased need to focus on the sports, ambassadors, influencers, collaboration partners and communication platforms that are most relevant in the different markets. A good example is India, where we have a market-leading position in part due to our strong presence in the nation’s most popular sport, cricket, and our long-term partnership with Virat Kohli, the captain of the Indian national cricket team.

PUMA continued to improve the quality of distribution by expanding its presence in key sports performance and sportstyle accounts around the world. We were able to strengthen the relationships with our retailers by being a flexible and service-oriented business partner also throughout the COVID-19 pandemic. In parallel, we invested in our direct-to-consumer business, which includes our owned-and-operated retail stores as well as our e-commerce business. During 2020, we saw strong growth in our e-commerce business and invested in our respective front-end and back-end capabilities as well as performance marketing to drive traffic and conversion.

In sourcing, we worked very closely with all our suppliers throughout 2020 and supported each other wherever possible to mitigate the negative consequences of the COVID-19 pandemic. The strong partnership with our suppliers has helped us tremendously in a challenging environment and contributed to a very resilient supply chain situation in 2020. It also enabled us to avoid nearly any disruptions in the delivery of products to our retail partners and consumers around the world. We cancelled very few (less than 1%) orders and we paid our suppliers the costs for those orders we cancelled. The long-term collaboration with our suppliers proved to be indispensable in 2020 and will continue to be a key component of our strategy.

On the operational side, we made good progress with the upgrade of our logistics network in order to support our overall growth ambitions. In 2020, we opened our new highly automated multi-channel distribution center in Indianapolis, USA, which will speed up delivery times in the US. In Europe, we continued to work on our multi-channel distribution center in Geiselwind, Germany, which is expected to be operational in the second quarter of 2021. In addition, we worked on multiple other distribution center projects around the world.

While social, economic and environmental sustainability has always been a core value for PUMA, we wanted to place an even higher strategic emphasis on this topic with a special focus on increasing the number of sustainable products in our ranges and stronger consumer-facing communication. In 2020, we officially announced our 10FOR25 targets which outline our ambitious sustainability-related objectives until 2025 and are linked to the United Nation’s Sustainable Development Goals. We also launched our FOREVER BETTER communication platform, which we will use to communicate our sustainability programs to consumers. In 2020, we presented two collections with a sustainability focus, which received strong feedback from our retailers and end consumers: PUMA x FIRST MILE and PUMA x CENTRAL SAINT MARTINS.

Outlook 2021

Our sales and profitability rebounded strongly in the third quarter of 2020 after a very weak second quarter, which was severely impacted by the COVID-19 pandemic. Given this strong rebound, we anticipated that 2021 would become what 2020 was initially supposed to be: a year characterized by double-digit sales growth compared to the 2019 baseline and a strong improvement in our operating result (EBIT) driven by a slight improvement in our gross profit margin and operational leverage (2019 EBIT: € 440.2 million).

However, as the number of COVID-19 cases continues to be on a very high level globally, several governments have already extended their lockdowns until end of February or even into March. As of today, approximately 50% of the retail stores selling our products in Europe are still closed due to various lockdown measures. Also in multiple other markets the retail stores remain closed or are operating with significant restrictions. By consequence, a part of our business in 2021 will be once again negatively impacted by the COVID-19 pandemic despite a strong orderbook and high demand from our retail partners and consumers.

We will continue to mitigate the consequences of the COVID-19 pandemic wherever possible but foresee a negative impact on our business especially in the first half of 2021. We currently believe that the first quarter and also the beginning of the second quarter will be heavily impacted. However, we believe that we will see a recovery until the end of the second quarter and strong improvements throughout the third and fourth quarter. Given that vaccination campaigns are already under way in almost all parts of the world, we remain confident especially for the second half of 2021. For the full year 2021 we therefore expect at least a moderate increase in sales in constant currency – with an upside potential – (2020: € 5,234.4 million) and both, our operating result (EBIT 2020: € 209.2 million) and net earnings (2020: € 78.9 million) will show a significant improvement compared to 2020. The development of our gross profit margin and our OPEX-ratio for 2021 will depend on the degree and duration of the negative impact of the COVID-19 pandemic on our sales.
Our quick recovery in the third quarter and the beginning of the fourth quarter of 2020 and our strong orderbook for the year 2021 combined with very good feedback from retail partners and consumers around the world make us confident for the mid-term success and growth of PUMA.

Working Capital

We were able to reduce our working capital by 6.2% from € 788.7 million last year to € 740.2 million as of March 31, 2021. Inventories increased by 8.3% from € 1,129.9 million to € 1,224.0 million. Trade receivables were up 36.5% from € 672.0 million to € 917.5 million due to strong sales growth in March. On the liabilities side, trade payables increased by 42.1% from € 742.3 million to € 1,054.9 million due to extended payment terms agreed with our suppliers.
 

Outlook 2021

The year 2021 started with an all-time high of COVID-19 cases globally and continued restrictions for our operations in numerous markets. At the end of April 2021, approximately 30% of the retail stores selling our products in Europe and Latin America are still closed due to lockdown measures and the remaining 70% are mostly operating with significant restrictions. With global COVID-19 cases rising again sharply, we also see new restrictions and lockdowns in other parts of the world such as India, Canada and Turkey. By consequence, we foresee a continued negative impact of the COVID-19 pandemic on our business throughout 2021. In addition, supply chain issues due to container shortages and port congestion especially in North America as well as recent political tensions in key markets are also leading to increased uncertainty in our industry. 



Despite all these uncertainties, our sales grew by 25.8% (ca) and our EBIT increased by 116.7% in the first quarter of 2021, underlining the relevance and momentum of our brand even in a difficult market environment. Given a strong first quarter, we are now in a position to further specify our initial outlook of “at least moderate sales (ca) growth with upside potential” to “mid-teens sales (ca) growth” for the full year 2021. Our outlook for both the operating result and net earnings has not changed and we continue to foresee a significant improvement compared to 2020 despite the global uncertainty regarding the COVID-19 pandemic. We do not provide a detailed outlook on our gross profit margin and our OPEX-ratio as their development will mainly depend on the duration and development of the COVID-19 pandemic and the timing and negative impact of corresponding restrictions on our sales. 



We will continue to manage the negative implications of the COVID-19 pandemic as well as we can in the short-term and are convinced that PUMA will emerge stronger from this crisis. Our strong and profitable growth in the first quarter, a very positive orderbook and strong product pipeline for the rest of the year and very good feedback from retail partners and consumers make us confident for the mid-term success and growth of PUMA. 

Second Quarter 2021

Sales increased by 95.8% (ca) to € 1,589.1 million (+91.2% reported). All regions and product divisions contributed with at least double-digit sales increases (ca). Americas reported the strongest growth of 181.8% (ca), driven by strong demand for the PUMA brand in the North American market, followed by EMEA, which improved 85.4% (ca) and Asia/Pacific being up 29.6% (ca). Footwear was the growth driver (+114.0% ca), based on continued strong performance of our Running and Training as well as Sportstyle categories. Also, Apparel (+85.5% ca) and Accessories (+72.2% ca) showed strong growth in the second quarter of 2021. Compared to the second quarter of 2019, sales were up 36.3% (ca) with all regions and product divisions delivering double-digit increases.

PUMA’s Wholesale business grew by 114.2% (ca) to € 1,200.0 million. The Direct to Consumer business (DTC) increased by 54.7% (ca) to € 389.1 million with growth in owned & operated retail stores (+107.0% ca) and e-commerce (+8.5% ca). After stores gradually reopened in the second quarter, demand shifted partially from the e-commerce channel to retail stores, while the overall underlying demand for the PUMA brand was strong.

The gross profit margin in the second quarter improved by 360 basis points to 47.5% (Q2 2020: 43.9% / Q2 2019: 49.3%). The improvement in gross profit margin was driven by better sell-through and less promotional activity, while inefficiencies in the supply chain including inbound freight had a negative impact.

Operating expenses (OPEX) increased by 34.5% to € 650.4 million (Q2 2020: € 483.5 million / Q2 2019: € 531.6 million) due to higher marketing expenses as well as sales-related distribution and warehousing costs. As a result of COVID-19, we continued to face operating inefficiencies in our business. The OPEX ratio in percent of total sales decreased from 58.2% in the second quarter of 2020 to 40.9% in the second quarter of 2021 (Q2 2019: 43.3%).

The operating result (EBIT) in the second quarter increased to € 108.9 million (Q2 2020: € -114.8 million / Q2 2019: € 80.3 million) due to strong sales growth, higher gross profit margin and continued OPEX control. This resulted in an improved EBIT margin of 6.9% in the second quarter of 2021 (Q2 2020: -13.8% / Q2 2019: 6.5%).

Net earnings increased from € -95.6 million to € 48.7 million and earnings per share improved from € -0.64 in the second quarter of 2020 to € 0.33 in the second quarter of 2021.

First Half-Year 2021

Sales increased by 53.6% (ca) to € 3,137.9 million (+47.3% reported). The strong sales development was driven by double-digit growth rates in all regions and product divisions. Compared to the first half of 2019, PUMA’s sales grew 30.0% (ca).

The Wholesale business was up 57.3% (ca) to € 2,402.0 million while the Direct to Consumer business (DTC) increased by 42.7% (ca) to € 735.9 million with growth in owned & operated retails stores (+49.2% ca) as well as e-commerce (+33.5% ca).

The gross profit margin in the first half of 2021 improved by 180 basis points to 48.0% (H1 2020: 46.2% / H1 2019: 49.2%). The improvement in gross profit margin was driven by better sell-through, less promotional activity and a low base in 2020 due to the negative impact of the COVID-19 pandemic.

Operating expenses (OPEX) increased by 20.7% to € 1,251.5 million (H1 2020: € 1,036.8 million / H1 2019: € 1,042.3 million) due to higher marketing expenses, sales-related distribution and warehousing costs as well as operating inefficiencies due to COVID-19. The respective OPEX ratio in percent of total sales decreased from 48.7% in the first half of 2020 to 39.9% in the first half of 2021 (H1 2019: 40.9%).

The operating result (EBIT) in the first half of 2021 increased significantly to € 263.2 million (H1 2020: € -43.6 million / H1 2019: € 222.8 million) due to strong sales growth, higher gross profit margin and continued OPEX control. This resulted in an improved EBIT margin of 8.4% in the first half of 2021 (H1 2020: -2.0% / H1 2019: 8.8%).

Net earnings increased from € -59.4 million to € 157.8 million and earnings per share were up from € -0.40 in the first half of 2020 to € 1.06 in the first half of 2021.

Working Capital

The working capital increased by 6.1% to € 691.9 million (June 30, 2020: 652.1 million). Inventories were up by 7.7% at € 1,388.7 million despite the supply chain constraints due to container shortages and port congestion. As a result of the strong sales development in the second quarter, trade receivables rose by 62.6% to € 931.1 million and on the liabilities side, trade payables were up by 39.9% to € 1,270.6 million.

Cash Flow and Liquidity Situation

The free cash flow in the first half of 2021 improved significantly to € 24.6 million (H1 2020: € -206.0 million). This development was a result of the strong increase of earnings before taxes (EBT), while cash outflows for working capital and capital expenditures increased. PUMA’s cash and cash equivalents as of June 30, 2021 amounted to € 755.2 million (June 30, 2020: € 437.0 million). In addition, at the end of the second quarter, PUMA had unutilized credit facilities amounting to a total of € 934 million (June 30, 2020: € 1,263 million). 

Outlook 2021

2021 started with an all-time high of COVID-19 cases globally and continued restrictions for our operations in numerous markets as well as supply chain constraints due to container shortages and port congestion. In addition to the implications from the COVID-19 pandemic, political tensions in some of our key markets also had a significant impact on our business. Despite the uncertainty, PUMA has maneuvered well throughout the first half of the year based on continued brand momentum, successful product launches with high sell-through and a strong focus on flexibility in our operations.

In light of the sales and profitability growth, especially in the second quarter, PUMA now expects the currency-adjusted sales to increase at least 20% (previous outlook: mid-teens currency-adjusted sales growth) in the financial year 2021. The outlook for the operating result (EBIT) has been further specified and is now anticipated to come in between € 400 million and € 500 million (previous outlook: significant improvement). In line with the previous outlook, we do not provide a detailed outlook on our gross profit margin and OPEX-ratio. Our net earnings are still expected to improve significantly in 2021.

As COVID-19 cases are rapidly growing in key sourcing countries in Asia, securing the supply of our products remains a high priority for us. The recent lockdown measures taken by the government in Vietnam result in suspended production at some of our suppliers in South Vietnam. As the duration, intensity and a potential extension of the lockdown measures to other countries remains uncertain, the achievement of our outlook will be subject to continued manufacturing without further major interruptions due to the COVID-19 pandemic.

PUMA will continue to mitigate the negative short-term implications of the COVID-19 pandemic by building on its brand momentum and the strong relationships which it gained from being a reliable partner, especially throughout 2020. Our strong and profitable growth in the first half of 2021, a strong product line-up for the rest of the year and very good feedback from retail partners and consumers make us confident for the mid-term success and growth of PUMA.
 

Brand and Strategy Update

Following a year marked by the COVID-19 pandemic, PUMA started 2021 with a strong orderbook across all regions. Despite first positive signs regarding the development of the pandemic, especially in the second quarter, we had to manage the implications of lockdowns and restrictions in different markets and sourcing countries. Wherever needed, we focused on working together with all of our partners to manage the short-term challenges, such as store and factory closures, without hindering our mid-term momentum.

The health and safety of our partners, customers and employees remained a top priority in the first half. Where it was possible, we offered COVID-19 vaccines to our employees. At our headquarters in Herzogenaurach, Germany, PUMA vaccinated more than 1,000 employees and 90 percent of our staff was fully vaccinated by mid-July. In India, which was hit exceptionally hard by COVID-19 in the second quarter, we offered a vaccination program for all of our employees and also assisted employees and their families in getting access to medical care when necessary.

For our efforts to provide an attractive workplace, we were named Top Employer Europe for the second time in a row.

We continued to focus on our eight strategic priorities: brand heat, product ranges that are right for our consumers, a comprehensive offer for women, the quality of our distribution, the speed and efficiency of our organizational infrastructure, focus on the North American market by re-entering into basketball and focus on local relevance and sustainability.

To drive brand heat, we signed several new partners such as French DJ and record producer DJ Snake. In Teamsport, we signed long-term agreements with the French national team players Raphaël Varane and Kingsley Coman. We also partnered with NHL All-Star Leon Draisaitl, who will become the first NHL ice hockey player to join the company as a brand ambassador for training and fitness. In Basketball, we were joined by the most valuable player in the WNBA Breanna “Stewie” Stewart and PUMA player LaMelo Ball was voted Rookie of the Year in the NBA.

Signing some of the best athletes and teams in the world gives PUMA credibility as a sports brand and makes it stay true to its roots in performance. The success of our athletes and teams also reflects positively on us as a brand and improves our brand heat.

PUMA team Italy won the UEFA Euro 2020, which was held in 2021, and with Giovanni Di Lorenzo, Giorgio Chiellini, Harry Maguire, Kyle Walker and Jordan Pickford we had five players wearing PUMA’s latest football boots in the final. All four PUMA federations (Austria, Czech Republic, Italy and Switzerland) had progressed to the knock-out stages and we had three teams in the quarterfinals - more than any other sports brand.

On a club level, Manchester City won the Premier League for the third time in four years and reached the Champions League final. In Germany, Borussia Dortmund won the DFB Cup and our Brazilian team Palmeiras won the Copa Libertadores. We also signed additional top clubs including Fenerbahce Istanbul in Turkey or Shakhtar Donetsk in Ukraine.

In track and field, PUMA athlete Karsten Warholm made history when he broke the 29-year-old 400m hurdles World Record, wearing PUMA’s new EvoSPEED Future FASTER+ spike, which we developed together with Formula 1 team MERCEDES AMG PETRONAS. Karsten’s success adds to the list of track and field World Records set in PUMA performance footwear: Men 100m, 200m (both Usain Bolt, Jamaica), 1000m (Noah Ngeny, Kenya), 3000m steeple chase (Saif Shaheen, Qatar), triple jump (Jonathan Edwards, GB), pole vault (Armand “Mondo” Duplantis, Sweden) and now 400m hurdles. Our highly innovative performance products and the roster of world-leading athletes make us look forward to this year’s Summer Olympics in Tokyo. We will have 13 PUMA-sponsored federations and more than 200 individual athletes from 35 different countries in track and field as well as many more athletes in other sports competing in Tokyo this summer.

In Golf, PUMA player Bryson DeChambeau won the Arnold Palmer Invitational in March, while in Motorsport, PUMA teams Red Bull Racing Honda and MERCEDES AMG PETRONAS are dominating the season.

To amplify the successes of our athletes and to spread a message of hope, optimism and self-belief, following what many consider to be one of the most challenging years, PUMA launched the ONLY SEE GREAT campaign. As part of this campaign, which is inspired by cultural icon, entrepreneur and philanthropist Shawn “JAY-Z” Carter, PUMA ambassadors such as Neymar Jr. have told their story of how they achieved greatness in a series of media interviews and content on PUMA’s digital channels.

On the product side, we presented a completely new line-up of performance running shoes featuring our cushioning technology NITRO. The DEVIATE, DEVIATE ELITE, VELOCITY, LIBERATE, and ETERNITY offer an effortless run and received very positive reviews from runners and the media alike.

Our PUMA classics continued to resonate well with consumers in line with the retro trend in the market. One of our latest styles for women, the MAYZE also took inspiration from the past and mixed it with modern elements and playful colors. The MAYZE is worn by the global pop star Dua Lipa and selling very well across all key markets.

We reiterated our commitment to creating a leading product offer for women with our SHE MOVES US platform. SHE MOVES US brings together our top female brand ambassadors such as Dua Lipa, Cara Delevingne, Magdalena Eriksson and Jodie Williams to celebrate the women who have moved culture and sports forward and inspire other women around the world. As part of SHE MOVES US, PUMA also teamed up with “Women Win”, an organization which gives women and girls around the world the possibility to compete in sports. In June, PUMA announced that it would have its own team in the W Series, the international motor racing championship for female drivers only.

We took an important step towards strengthening our distribution and logistics network by starting operations at our new logistics center in Geiselwind, Germany. The center is being ramped up gradually and we expect it to be fully operational towards the end of 2021. We also increased the reach of our Direct to Consumer business by launching new PUMA.com stores in the United Arab Emirates and Mexico.

In the first half of 2021, the pandemic impacted different regions differently. This once again affirmed our belief in local relevance and local decision-making, giving local management the tools to react quickly to changes in the market they know best.

PUMA continued to establish itself as a credible brand in Basketball, following its re-entry into the sport in 2018, an important move to stay relevant as a sports brand, especially in the North American market. After last year’s success of the RS-DREAMER Basketball sneaker, designed by J.Cole, PUMA launched the RS-DREAMER 2, a mid-silhouette intended to be worn on and off the court. The Basketball business also launched several successful collaborations this year, from nostalgic cartoon Rugrats to popular video game NBA 2K. The next highlight will be the introduction of the LaMelo Ball signature shoe which is planned for Q4 2021.

This year, PUMA announced further steps to make its products and its supply chain more sustainable, both from an environmental and social point of view. With our 10FOR25 sustainability targets, we ensure that whenever our consumers buy a PUMA product, they are buying a sustainably sourced product. That is why we set ourselves the goal of making nine out of ten PUMA products with more sustainable materials by 2025. We also signed an agreement with not-for-profit environmental organization Canopy and committed to protect forests around the world when sourcing paper, cardboard and viscose. We communicate these efforts to our consumers through our FOREVER BETTER platform.

To further strengthen our organization, we have created the new role of Chief Commercial Officer within the Board of Management, increasing the number of board members from three to four. Arne Freundt took on this new role on June 1 and he oversees Sales, including Retail & E-Commerce, and Logistics. Also, effective June 1, Hubert Hinterseher was named as the new Chief Financial Officer, taking over from Michael Lämmermann who retired after 28 years with the company. Hubert is responsible for Finance, Legal, IT and Business Solutions. 

Third Quarter 2021

Sales increased by 20.4% (ca) to € 1,900.4 million (+20.0% reported). The Americas reported the strongest growth of 31.2% (ca), driven by continued high demand for the PUMA brand in the North American and Latin American markets. EMEA recorded growth of 22.3% (ca), which was driven by strong demand in Europe and emerging markets such as Russia, Turkey and South Africa. Asia/Pacific grew 1.7% (ca) despite a difficult market environment in Greater China and COVID-19 related lockdowns in markets such as Japan, South East Asia and Australia. In terms of product divisions, Footwear was up by 21.6% (ca), based on continued strong demand for our Performance and Sportstyle categories. Apparel (+21.3% ca) and Accessories (+15.2% ca) also showed double-digit growth in the third quarter of 2021.Compared to the third quarter of 2019, total sales were up 35.4% (ca).

PUMA’s Wholesale business grew by 22.6% (ca) to € 1,470.5 million and the Direct-to-Consumer (DTC) business increased by 13.3% (ca) to € 429.9 million, with growth across owned & operated retail stores (+18.0% ca) and e-commerce (+4.0% ca). In line with our strategy to be a good and reliable partner for our wholesale accounts, we continued to prioritize them when supply was limited.

The gross profit margin in the third quarter improved by 40 basis points to 47.4% (Q3 2020: 47.0% / Q3 2019: 49.7%). The improvement in gross profit margin was driven by better sell-through and less promotional activity, while currency, geographical and channel mix effects as well as higher freight rates had a negative impact.

Operating expenses (OPEX) increased by 21.2% to € 678.0 million (Q3 2020: € 559.6 million / Q3 2019: € 578.5 million) as a result of higher marketing expenses, more retail stores operating as well as higher sales-related distribution and warehousing costs. PUMA continued to face operating inefficiencies especially in our supply chain in the third quarter due to COVID-19. Consequently, the OPEX ratio increased from 35.3% in the third quarter of 2020 to 35.7% in the third quarter of 2021 (Q3 2019: 39.2%).The operating result (EBIT) in the third quarter increased to € 228.9 million (Q3 2020:€ 189.5 million / Q3 2019: € 162.2 million) due to strong sales growth, improved gross profit margin and continued OPEX control. This resulted in an EBIT margin of 12.0% in the third quarter of 2021 (Q3 2020: 12.0% / Q3 2019: 11.0%).

Net earnings increased from € 113.6 million to € 143.8 million and earnings per share improved from € 0.76 in the third quarter of 2020 to € 0.96 in the third quarter of 2021.

Nine Months 2021

Sales increased by 39.1% (ca) to € 5,038.3 million (+35.6% reported). The strong sales development was driven by double-digit growth rates in all regions and product divisions.Compared to the first nine months of 2019, PUMA’s sales grew 32.0% (ca).

The Wholesale business was up 42.0% (ca) to € 3,872.5 million while the Direct-to-Consumer business (DTC) increased by 30.3% (ca) to € 1,165.8 million with growth in owned & operated retails stores (+35.0% ca) as well as e-commerce (+22.5% ca).

The gross profit margin in the first nine months of 2021 improved by 130 basis points to 47.8%(9M 2020: 46.5% / 9M 2019: 49.4%). The improvement in gross profit margin was driven by better sell-through and less promotional activity, while geographical and channel mix effects had a negative impact.

Operating expenses (OPEX) increased by 20.9% to € 1,929.5 million (9M 2020: € 1,596.4 million / 9M 2019: € 1,620.7 million). Higher marketing expenses, a higher number of retail stores in operation, higher sales-related distribution and warehousing costs, as well as operating inefficiencies due to COVID-19 contributed to this increase. However, the respective OPEX ratio decreased from 43.0% in the first nine months of 2020 to 38.3% in the first nine months of 2021 (9M 2019: 40.3%) due to higher sales growth and continued OPEX control.

The operating result (EBIT) in the first nine months of 2021 increased significantly to € 492.1 million (9M 2020: € 145.9 million / 9M 2019: € 385.0 million) due to strong sales growth, higher gross profit margin and continued OPEX control. This led to an improved EBIT margin of 9.8% in the first nine months of 2021 (9M 2020: 3.9% / 9M 2019: 9.6%).

Net earnings increased from € 54.2 million to € 301.7 million and earnings per share were up from € 0.36 in the first nine months of 2020 to € 2.02 in the first nine months of 2021.

Working Capital

The working capital increased by only 2.3% to € 719.0 million (September 30, 2020: € 703.2 million / September 30, 2019: € 915.7 million). Inventories which include Goods in Transit were up by 11.6% to € 1,363.9 million. The COVID-19 related lockdown in South Vietnam and corresponding delays restricted the product supply and consequently limited inventory levels at the end of the third quarter. As a result of the strong sales development in the third quarter, trade receivables rose by 39.0% to € 1,058.6 million. On the liabilities side, trade payables were up by 28.4% to € 1,202.8 million.

Outlook 2021

2021 started with an all-time high of COVID-19 cases globally and continued restrictions for our operations in numerous markets as well as supply chain constraints due to container shortages and port congestion. In addition to the implications from the COVID-19 pandemic, political tensions in some of our key markets also had a significant impact on our business. Despite the uncertainty, PUMA has maneuvered well throughout the first nine months of the year, based on continued brand momentum, successful product launches with high sell-through and a strong focus on flexibility in our operations.

Considering the strong financial performance in the first nine months of the year, PUMA further specifies its outlook and now expects the currency-adjusted sales to increase at least 25% (previous outlook: at least 20% currency-adjusted sales growth) in the financial year 2021. The operating result (EBIT) is now expected to be in a range between € 450 million and € 500 million (previous outlook: between € 400 and € 500 million). In line with the previous outlook, PUMA does not provide a detailed outlook on the gross profit margin and OPEX development. The net earnings are still expected to improve significantly in 2021.

As a result of the longer-than-expected lockdown in South Vietnam as well as port congestion and container shortages, the industry faces delays, which are having a negative impact on PUMA’s product supply in the short-term. PUMA will continue to maneuver through these challenges by building on its brand momentum and operational flexibility. The strong and profitable growth in the first nine months of 2021, a strong product line up as well as very good feedback from retail partners and consumers make us confident for the mid-term success and growth of PUMA.

FIRST QUARTER 2022

Sales increased by 19.7% (ca) to € 1,912.2 million (+23.5% reported). Americas reported the strongest sales growth of 44.1% (ca), driven by continued high demand for the PUMA brand in the North American and Latin American markets. Sales in EMEA were up 25.5% (ca), reflecting strong growth across all key markets in Europe. Sales in Asia/Pacific declined 17.0% (ca) due to the current market environment in Greater China resulting from COVID-19 related restrictions and geopolitical tensions. All product divisions grew double-digit with Footwear being up 18.2% (ca), Apparel 16.0% (ca) and Accessories 32.2% (ca). The growth was driven by a strong demand for our Performance categories like Running & Training, Teamsports, Golf and Basketball, as well as for the Sportstyle category.

PUMA’s Wholesale business increased by 23.3% (ca) to € 1,528.2 million and the Direct-to-Consumer (DTC) business was up by 7.1% (ca) to € 384.0 million. Sales in owned & operated retail stores increased 21.3% (ca) while e-commerce declined 13.2% (ca) as we continued to prioritize our retailers when supply was limited and due to the current market environment in Greater China.

The gross profit margin declined by 130 basis points to 47.2%, mainly caused by an unfavorable geographical and channel mix as well as higher freight rates while currencies had a slight positive effect. Operating expenses (OPEX) increased by 18.6% to € 712.8 million as a result of higher marketing expenses, more retail stores operating as well as higher sales-related distribution and warehousing costs. Despite ongoing operating inefficiencies due to COVID-19, especially in the supply chain, the OPEX ratio decreased to 37.3% (Q1 2021: 38.8%).

The operating result (EBIT) increased by 27.0% to € 196.0 million (Q1 2021: € 154.3 million). A strong sales growth and an improved OPEX ratio resulted in an EBIT margin increase by 30 basis points to 10.3% (Q1 2021: 10.0%).

Net earnings increased from € 109.2 million to € 121.4 million and earnings per share were up by 11.1% from € 0.73 in the first quarter of 2021 to € 0.81 in the first quarter of 2022.

WORKING CAPITAL

The working capital increased by 35.8% to € 1,004.8 million (March 31, 2021: € 740.2 million). Inventories were up by 32.2% to € 1,618.3 million (March 31, 2021: € 1,224.0 million) with most of the increase driven by Goods in Transit. Given the uncertainty about the impact of the COVID-19-related restrictions on our suppliers in Asia, we accelerated the delivery of our products wherever possible. Trade receivables increased by 23.0% to € 1,128.5 million (March 31, 2021: € 917.5 million) mainly as a result of strong sales growth. On the liabilities side, trade payables increased by 20.9% to € 1,275.0 million (March 31, 2021: € 1,054.9 million).

OUTLOOK 2022

PUMA has had a strong start to the year with a sales growth of 19.7% (ca) to € 1,912 million and an EBIT increase of 27.0% to € 196 million in the first quarter of 2022, underlining the continued momentum of the PUMA brand in a difficult market environment.

The year 2022 has again started with a high level of uncertainty in the global business environment. Several governments have implemented regional or country-wide restrictions due to a record high of COVID-19 infections, which continue to impact our value chain from manufacturing to retail store operations. The overall supply chain situation remains challenging due to port congestions, limited shipping capacities and continued freight rate increases. The crisis in Ukraine is having a direct negative impact - leading to lost sales and EBIT - and an indirect impact through the general tense geopolitical situation and increasing uncertainty worldwide. As a result, we continue to see inflationary pressures in all markets.

Despite the increasing uncertainties in 2022, we confirm a currency-adjusted sales growth of at least ten percent – with upside potential – in the financial year 2022. In line with our previous outlook we anticipate our operating result (EBIT) to be in a range of € 600 million and € 700 million (2021: € 557 million) and net earnings to improve correspondingly. The development of our gross profit margin and our OPEX-ratio in 2022 will continue to largely depend on the degree and duration of the negative impacts described above. While we will stay focused on our growth momentum by servicing our retail partners and consumers in the best possible way, we expect inflationary pressures from higher freight rates and raw material prices, as well as operational inefficiencies due to COVID-19 and the Ukraine crisis to dilute our profitability in 2022.

The achievement of this outlook is subject to continued manufacturing operations in our key sourcing countries in Asia and no major business interruptions due to COVID-19. In line with the previous years, PUMA will continue to manage the challenges short-term without hindering the positive mid-term momentum. The strong and profitable growth in the first quarter, a strong orderbook, an exciting product line-up as well as very good feedback from retailers and consumers make us confident for the mid-term success and growth of PUMA.

Second Quarter 2022

Sales increased by 18.4% (ca) to € 2,002.0 million (+26.0% reported), representing the highest quarterly sales in PUMA’s history. A continued high demand for the PUMA brand in the Americas region resulted in a strong sales growth of 25.6% (ca). Sales in EMEA were up 21.5% (ca), driven by strong growth across all key markets in Europe. Sales in Asia/Pacific declined 1.8% (ca) due to COVID-19 related lockdown measures in Greater China, while other major markets in Asia/Pacific recorded strong growth. All product divisions grew double-digit with Footwear being up 19.7% (ca), Apparel up 20.2% (ca) and Accessories up 11.2% (ca). In line with previous quarters, growth was driven by continued strong demand for our Performance categories like Running & Training, Teamsports, Golf and Basketball, as well as for the Sportstyle category.

PUMA’s Wholesale business increased by 22.6% (ca) to € 1,563.2 million and the Direct-to-Consumer (DTC) business was up by 5.5% (ca) to € 438.8 million. Sales in owned & operated retail stores increased 11.3% (ca), while e-commerce declined 4.1% (ca), mainly due to lockdown measures in Greater China. We continued to execute our strategy of being the best partner for our retailers and continued to prioritize them over DTC.

The gross profit margin decreased by 100 basis points to 46.5%, mainly caused by an unfavorable geographical and channel mix as well as higher freight rates, while currencies had a positive effect.

Operating expenses (OPEX) increased by 21.6% to € 791.2 million as a result of higher marketing expenses, more retail stores operating as well as higher sales-related distribution and warehousing costs. Despite ongoing operating inefficiencies due to COVID-19, especially in the supply chain, the OPEX ratio decreased to 39.5% (Q2 2021: 40.9%) due to higher sales growth and continued OPEX control.

The operating result (EBIT) increased by 34.4% to € 146.3 million (Q2 2021: € 108.9 million). Strong sales growth and an improved OPEX ratio resulted in an EBIT margin increase by 40 basis points to 7.3% (Q2 2021: 6.9%).

Net earnings increased by 73.2% from € 48.7 million to € 84.3 million and earnings per share were up from € 0.33 in the second Quarter of 2021 to € 0.56 in the second Quarter of 2022.

First Half Year 2022

Sales increased by 19.0% (ca) to € 3,914.1 million (+24.7% reported). Americas led the growth with a 33.6% (ca) increase in sales, followed by the EMEA region, with all key markets in Europe contributing strong growth to a 23.5% (ca) increase in sales. Sales in the Asia/Pacific region were down 10.4% (ca) due to geopolitical tensions and COVID-19 related lockdown measures in Greater China, while other major markets in Asia/Pacific recorded strong growth. All product divisions grew double-digit, with Footwear being up 18.9% (ca), Apparel up 18.1% (ca) and Accessories up 20.9% (ca). 

The Wholesale business was up 22.9% (ca) to € 3,091.4 million and the Direct-to-Consumer (DTC) business increased by 6.2% (ca) to € 822.8 million. Sales in owned & operated retail stores increased 15.8% (ca), while e-commerce declined 8.6% (ca). E-commerce was impacted by our continued prioritization of retail partners and the lockdown measures in Greater China.

The gross profit margin decreased by 120 basis points to 46.8% (H1 2021: 48.0%). The decline was mainly caused by an unfavorable geographical and channel mix as well as higher freight rates, partially offset by currencies.

Operating expenses (OPEX) increased by 20.2% to € 1,504.1 million (H1 2021: € 1,251.5 million). Higher marketing expenses, more retail stores operating, higher sales-related distribution and warehousing costs, as well as operating inefficiencies due to COVID-19 contributed to this increase. However, the respective OPEX ratio decreased from 39.9% in the first half of 2021 to 38.4% in the first half of 2022 due to higher sales growth and continued OPEX control.

The operating result (EBIT) increased by 30.1% to € 342.4 million (H1 2021: € 263.2 million) due to a strong sales growth and an improved OPEX ratio. The EBIT margin improved by 30 basis points to 8.7% (H1 2021: 8.4%).

Net earnings increased by 30.3% from € 157.8 million to € 205.6 million and correspondingly earnings per share were up from € 1.06 in the first half of 2021 to € 1.37 in the first half of 2022.

Working Capital

The working capital increased by 54.3% to € 1,067.4 million (June 30, 2021: € 691.9 million). Inventories were up by 42.9% to € 1,984.4 million (June 30, 2021: € 1,388.7 million),  which continued to be impacted by higher Goods in Transit. Trade receivables increased by 27.8% to € 1,189.8 million (June 30, 2021: € 931.1 million) mainly as a result of strong sales growth. On the liabilities side, trade payables increased by 30.4% to € 1,657.1 million (June 30, 2021: € 1,270.6 million).
 

Cash Flow and Liquidity Situation

The free cash flow improved by 57.1% to € 38.6 million in the first half of 2022 (H1 2021:  € 24.6 million). As of June 30, 2022, PUMA had cash and cash equivalents of € 498.4 million, a decrease of 34.0% compared to the first half of 2021 (June 30, 2021: € 755.2 million). In addition, the PUMA Group had credit lines totaling € 1,276.9 million as of June 30, 2022 (June 30, 2021: € 1,424.1 million). Unutilized credit lines amounted to € 923.6 million on the balance sheet date compared to € 933.7 million in the first half of 2021. 

Brand & Strategy Update

With the ongoing COVID-19 pandemic and the crisis in Ukraine, the first half of 2022 presented PUMA with several challenges that required us to remain flexible and find pragmatic solutions to continue to implement our strategy while taking care of the PUMA Family.

The wellbeing of our employees, athletes and partners in Ukraine was our immediate priority from the start of the crisis. We immediately secured safe accommodation in the west of Ukraine and set up additional housing options for our Ukrainian colleagues and their family members in Germany and Poland. We made sure that our colleagues who had to leave their home country received work permits and jobs in their new residences.

The crisis showed how we came together as a PUMA Family. We were inspired by our PUMAs who waited at the borders to welcome other PUMA employees and ambassadors who had fled Ukraine, as well as by our colleagues who drove to Ukraine to bring necessities such as food and clothes to their colleagues who had stayed in the country. 

At our headquarters in Herzogenaurach, we gathered product donations for aid organizations in Ukraine, to get help to those who needed it most. Several pallets of products also departed to Ukraine from our distribution center in Geiselwind.

For our efforts to provide an attractive workplace, PUMA was named a Top Employer 2022 in several regions of the world, including Europe and Asia/Pacific.

While the COVID-19 pandemic eased in Europe and the Americas in the first half of the year and we saw no further widespread store closures there, the situation in parts of Asia, especially in China, was still challenging for our store network and our supply chain. Our sourcing teams did an exceptional job to make sure that supply chain disruptions were kept to a minimum.

In 2022, we continued to implement our eight strategic priorities: brand heat, product ranges that are right for our consumers, a comprehensive offer for women, improving the quality of our distribution, increasing the speed and efficiency of our organizational infrastructure, leveraging our re-entry into basketball to improve our position in North America and to focus on local relevance and sustainability.

The performances of our track and field athletes at the World Indoor Championships in Belgrade, Serbia, and the World Athletic Championships in Eugene, Oregon, USA, underscored our credibility as a sports brand and created brand heat. PUMA enjoyed great visibility by equipping several federations and world-class athletes, in line with the company’s philosophy to provide the fastest athletes with the fastest products.

Among the highlights: In Belgrade, Ukrainian PUMA athlete Yaroslava Mahuchikh won gold in the high jump and created a very special moment at the event, as she won despite the crisis in her home country and the difficult three-day journey she had to make to get from Ukraine to Serbia.

In Eugene, Jamaican sprinter Shericka Jackson ran the second-fastest 200m time in history and in triple jump, Portuguese athlete Pedro Pichardo also won the gold with the performance of the year. Swedish pole vaulter Armand “Mondo” Duplantis added another centimeter to his world record performance and won the gold medal with a leap of 6.21 meters.

Our PUMA family continued to grow in the first half. In track and field, we signed a multi-year contract with the Brazilian Confederation of Athletics (CBAt).

But those were not the only performances that boosted our brand heat: in Football, our PUMA teams AC Milan and Manchester City both won the title and Olympique de Marseille and Borussia Dortmund came in second in their respective leagues. PSV Eindhoven won the Dutch Cup.

At the end of the season, we secured a long-term extension to our partnership with AC Milan and became the official naming partner of the club’s training center for future talents, which will be called the “PUMA House of Football.”

We also expanded our reach in Football, as we became the official match ball provider of the Italian football league Serie A, starting from the 2022/23 season.

In North America, PUMA basketball athlete Marcus Smart was named NBA Defensive Player of the Year, while PUMA ambassador and ice hockey player Leon Draisaitl set an NHL record for most assists in a single playoff series. In Golf, Cobra PUMA Golf athlete Ewen Ferguson secured his first victory on the DP WORLD TOUR by winning the Commercial Bank Qatar Masters.

In Motorsport, we welcomed the British Mercedes AMG Petronas F1 driver George Russell and the Alfa Romeo F1 Team ORLEN, including Finnish veteran Valtteri Bottas and Chinese rookie Zhou Guanyu.

As we continued to outfit the most successful teams in Formula 1, Scuderia Ferrari, Red Bull Racing and Mercedes, we also benefited from the increasing popularity of the sport, especially in the United States, where the inaugural Miami Grand Prix was completely sold out in record time.

Through our new partnership with the five-time World Chess Champion Magnus Carlsen and Meltwater Champions Chess Tour, PUMA connected the world of chess with the world of sport to create engaging content and activations for chess fans around the world.

We engaged with our consumers in the virtual world, by announcing our largest collaboration in the Web3 space to date with 10KTF, an NFT project where users can buy digital outfits. We also worked with Wonder Works Studio to create “PUMA and the Land of Games” on the online gaming platform Roblox and gave players the opportunity to dress their virtual characters in PUMA gear.

PUMA further strengthened its distribution by entering new markets with the PUMA.com online store in Saudi Arabia and the Philippines. To highlight the best of the PUMA brand and be close to our most loyal consumers, PUMA introduced a shopping app for smartphones on the Indian market, which allows consumers to virtually try on selected products before they buy, see what the products look like in sophisticated 3D animations and purchase PUMA products in an efficient and quick check out process. The app will be gradually rolled out to other markets.

As we have a vast archive at our disposal, our designers can take inspiration from more than 70 years of history to create fashion forward and relevant products for our customers. With the Slipstream, which was introduced by our Ambassadors Neymar Jr, Danna Paola and Romeo Beckham in June, PUMA brought back the classic design from the 1980s to make a clean and modern sneaker. A collection with Australian skate label Butter Goods also used archive-inspired styles and featured apparel with retro-inspired designs and prints.

Together with French fashion brand AMI, we designed an exclusive collection that combined tailoring and innovative sportswear design with minimalistic branding. We elevated our Motorsport offering with our partner Ferrari to create the premium ION F sneaker and we celebrated the 50th anniversary of the Porsche 911 RS 2.7 car with a limited edition of our classic SUEDE, which was sold out in hours.

New additions to our women’s offering included the Kosmo Rider, an expansion of the Rider franchise in bold colors and a chunky shape, which was promoted by social-media star and music artist Dixie D’Amelio. PUMA also presented a range of leak-free period underwear and activewear with Australian apparel company Modibodi, which was created to help women stay comfortable and active during their period.

In basketball, we added new styles to LaMelo Ball’s signature collection MB.01, such as the MB.01 Galaxy and a special edition on the animated series “Rick and Morty”, which became one of our most sought-after sneakers of 2022. We also welcomed the No. 2 overall pick from the 2022 WNBA draft NaLyssa Smith to our roster of PUMA Hoops athletes.

As local relevance continues to be an important part of our strategy to reach audiences in different parts of the world, we signed pop stars Eleni Foureira from Greece and Teodora from Serbia as brand ambassadors.

We entered a new category with the launch of a PUMA padel collection, including rackets, footwear, apparel and accessories, and signed padel players Jerónimo ‘Momo’ González, Victoria Iglesias, Marco Cassetta, and Xènia Clascà. We also continued to increase the number of locally developed products for the different regions, especially in the Sportstyle category.

In the first half of 2022, we made progress with our Forever Better sustainability strategy, especially when it comes to circularity. Our RE:SUEDE project, which tests whether we can make a biodegradable version of our iconic SUEDE sneaker, entered an important phase, as we distributed 500 pairs to participants in Germany and brand ambassadors such as Cara Delevingne, Raphaël Varane and Kyle Kuzma. After wearing them for half a year, our testers will return the sneakers to PUMA so we can see whether the RE:SUEDEs can be biodegraded in a controlled industrial setting.

We also introduced the RE:JERSEY recycling project with our football teams Manchester City, AC Milan, Borussia Dortmund, Olympique de Marseille and Girona. In this project, we use existing football jerseys to produce new ones, in a chemical recycling process where we can even take old garments that feature logos, embroideries and club badges to create polyester yarn for new jerseys. Other more sustainable products included a vegan version of our classic KING football boot, the KING Platinum 21 Vegan.

In May, we announced that we had cut our own carbon emissions and those coming from our supply chain between 2017 and 2021, even though the business grew strongly in the same period. We are on track to reduce emissions by what scientists say is necessary to avoid the worst consequences of climate change.

Part of our strategy to reduce carbon emissions is to switch to electric vehicles. At our warehouse in Torrance, California, USA, for example, we started transferring goods from the port of Los Angeles with a fully electric truck.

For our sustainability efforts, we were ranked as the most sustainable brand in the industry according to publication Business of Fashion, which evaluated the 30 largest companies in the fashion business.

In terms of organization, the Supervisory Board of PUMA SE has elected Héloïse Temple-Boyer as Chair of the Supervisory Board at its meeting in April. Héloïse Temple-Boyer has been a member of the Board since 2019 and is a member of the Audit Committee.

Outlook 2022 

PUMA performed very well in the first half of the year 2022. Based on continued brand momentum, successful product launches with strong sell-through and the best possible service to our retail partners and consumers, we delivered strong sales and EBIT growth.

While the first half of the year has been strong, we continue to face increasing geopolitical and macroeconomic uncertainties and challenges. The ongoing COVID-19-related restrictions, particularly in Asian markets, the crisis in Ukraine and persistently high inflation are negatively impacting consumer confidence and demand. In addition, ongoing supply chain constraints and price increases in sourcing and freight are limiting product availability and putting pressure on margins.

Considering the strong first half of the year, PUMA is raising its outlook from previously at least ten percent currency-adjusted sales growth – with upside potential – to mid-teens currency-adjusted sales growth. Due to the increased uncertainties, we reiterate our operating result (EBIT) to be in a range of € 600 million to € 700 million for the financial year 2022 (2021: € 557 million) and a corresponding improvement in net earnings. The development of our gross profit margin and OPEX-ratio will continue to depend largely on the extent and duration of the negative impacts described above. We expect inflationary pressures from higher freight rates and raw material prices, as well as operational inefficiencies due to COVID-19 and the Ukraine crisis, to dilute our profitability in 2022.

As in previous years, PUMA will continue to focus on managing the short-term challenges without hindering the mid-term momentum and will prioritize sales growth and market share gains over short-term profitability. The strong and profitable growth in the first half of the year, a strong orderbook, an exciting product line-up as well as very good feedback from retailers and consumers make us confident for the mid-term success and growth of PUMA.