2018 THIRD-QUARTER FACTS

• Sales increase by 14% currency-adjusted to € 1,242 million (+11% reported) with double-digit growth in the Americas and Asia/Pacific regions
• Gross profit margin improves to 49.6% 
• Operating expenses (OPEX) increase by 11% due to higher sales related variable costs and higher retail investments
• Operating result (EBIT) improves by 28% to € 130 million (last year: € 101 million) and EBIT-margin rises to 10.5% (last year: 9.0%) 
• Successful US pre-launch of Basketball in late September
• PUMA signs supermodel Adriana Lima as women's training ambassador
• PUMA adds international star-players to its roster, including Barcelona and Uruguay striker Luis Suárez, Axel Witsel (Belgian national team and Borussia Dortmund) and Dejan Lovren (Croatian national team and FC Liverpool)

2018 NINE-MONTH FACTS

• Sales increase by 17% currency adjusted to € 3,422 million (+11% reported) with double-digit growth in all regions and product segments
• Gross profit margin up by 150 basis points to 48.8% 
• Operating expenses (OPEX) increase 10% related to intensified marketing activities, higher sales related variable costs and higher retail investments 
• Operating result (EBIT) improves by 40% from € 215 million to € 300 million and EBIT-margin increases from 6.9% to 8.8% 
• Net earnings rise from € 134 million last year to € 176 million and earnings per share increase from € 8.94 last year to € 11.77 respectively
• Strong new style platforms Thunder and RS-0 established in the “chunky/ ugly shoe” category

The operating result (EBIT) improved by 39.6% from € 214.8 million last year to € 299.8 million in the first nine months of 2018 due to a strong sales growth and a higher gross profit margin. This corresponds to an EBIT-margin of 8.8% compared to 6.9% in the nine-month period last year.

The financial result in the nine-month period (€ -22.7 million; last year: € -5.9 million) was strongly impacted by currency losses mainly in Argentina and Turkey. Taxes on income came in at a normalized rate of 27.6% (last year: 28.3%). Due to the improved results of the PUMA companies in which external companies hold minority interests, the net earnings to be distributed to these minority shareholders increased to € -24.5 million in the first nine months (previous year: € -16.2 million) (Net earnings attributable to non-controlling interests).

Net earnings grew by 31.7% and came in at € 176.0 million (last year: € 133.6 million). This translates into earnings per share of € 11.77 compared to € 8.94 in the first nine months of 2017.

Balance Sheet and Working Capital

Currency translation effects and our continued focus on working capital management led to a slight decrease of working capital of -0.1% to € 762.2 million. Without these currency effects, working capital would have increased by approximately 6%, which is lower than the growth in our business. Inventories were up by 11.6% to € 888.4 million and trade receivables rose by 3.7% to € 702.7 million. On the liabilities side, trade payables and other current liabilities increased by 15.5% to a total of € 1,012.6 million.

The one-off dividend payment this year and the refinancing of the PUMA group after the reduction of Kering’s shareholding in PUMA have led to major movements in current and non-current liabilities in the balance sheet. 

 

Outlook 2018

The third quarter of 2018 saw a continued strong increase of sales and profitability, which was slightly above our expectations. As a consequence and based on the outlook for the remainder of the year, we slightly adapt our guidance for the full year 2018. PUMA now expects that currency-adjusted sales will increase between 14% and 16% (previous guidance: currency-adjusted increase between 12% and 14%). The gross profit margin is still anticipated to improve by approximately 100 basis points, while we now expect that operating expenses (OPEX) will increase at a low double-digit rate related to higher sales related variable costs (previous guidance: increase at a high single-digit rate). The operating result (EBIT) is now expected to come in between € 325 million and € 335 million (previous guidance: between € 310 million and € 330 million). In line with the previous guidance, Management still expects that net earnings will improve significantly in 2018.

Financial Calendar FY 2018:

 

February 12, 2018 Financial Results FY 2017

April 12, 2018 Annual General Meeting 

April 24, 2018 Quarterly Statement Q1 2018

July 26, 2018 Interim Report Q2 2018

October 25, 2018 Quarterly Statement Q3 2018

The financial releases and other financial information are available on the Internet at „about.puma.com“.



Notes to the editors:

• The financial reports are posted on www.about.puma.com
• PUMA SE stock symbol:
  Reuters: PUMG.DE, Bloomberg: PUM GY, 
  Börse Frankfurt: ISIN: DE0006969603– WKN: 696960
  
  
  
  
  Notes relating to forward-looking statements: 
  This document contains forward-looking statements about the Company’s future financial status and strategic initiatives. The forward-looking statements are based on the current expectations and assumptions of the management team. These are subject to a certain level of risk and uncertainty including, but not limited to those described above or in other disclosures, in particular in the chapter Risk and Opportunity Management in the Group Management Report. In the event that the expectations and the assumptions do not materialize or unforeseen risks arise, the Company's actual results can differ significantly from expectations. Therefore, we cannot assume responsibility for the correctness of these statements.
   

Operating expenses (OPEX) rose by 16.8% to € 510.7 million in the first quarter. The increase was mainly caused by higher sales-related variable costs, including logistics costs as well as higher marketing and retail investments. 
 
The operating result (EBIT) improved by 27.0% from € 112.2 million to € 142.5 million in the first quarter 2019 due to a strong sales growth combined with a higher gross profit margin. This corresponds to an EBIT-margin of 10.8% compared to 9.9% in the first quarter last year.

Net earnings went up by 40.1% from € 67.4 million last year to € 94.4 million in the first quarter of 2019, supported by an improved financial result. As a consequence, earnings per share improved from € 4.51 to € 6.31.

Working Capital

Despite the significant sales growth, working capital rose by only 7.1% from € 791.0 million to € 846.9 million. Inventories were up by 19.3% to € 907.5 million due to management of supplier capacities and to support the growing demand in the upcoming quarters. Trade receivables rose by 12.3% from € 685.0 to € 769.2 million. On the liabilities side, trade payables and other current liabilities increased by 17.1% to a total of € 1,004.8 million (last year: total of € 858.2 million).

 

Effects from first-time application of IFRS 16 Leases and related extension of the balance sheet

• The new lease standard (IFRS 16) has to be applied since the beginning of this year. This led to a significant extension of the balance sheet total as of March 31, 2019. The capitalization of the ‘rights of use’ from former operating-lease contracts at the amount of 
  € 635.6 million and the recognition of a corresponding lease liability on the balance sheet were the reasons for the increase of non-current assets and liabilities. A lease liability of 
  € 116.9 million is included in other current liabilities and € 535.1 million are included in other non-current liabilities. This extension of the balance sheet resulted in a negative impact on the equity ratio, which therefore decreased from 57.9% at year-end 2018 to 44.5% at the end of the first quarter 2019.
   
  The effects from the first-time application of IFRS 16 on the profit and loss statement of the first quarter 2019, however, were not material. IFRS 16 has had a slight positive effect on the operating result (EBIT) of € 3.8 million. Including the additional interest expense of € 6.6 million due to IFRS 16 and further deferred tax effects (+ € 0.8 million), the impact on net earnings in the first quarter 2019 in total was a negative amount of € 2.0 million.
  Please refer to the Notes to the Consolidated Financial Statements as of December 31, 2018, chapter 1 General, for a detailed description of the new lease accounting standard and the effects of the first-time application of IFRS 16.
  
  
   

  Outlook 2019
  
   

  After a strong start into 2019 both in terms of sales and profitability, we confirm our guidance for the full-year 2019, which was provided on February 14, 2019:

• Sales: currency-adjusted growth of around 10%
• Gross profit margin: slight improvement compared to last year (2018: 48.4%)
• OPEX: increase at a slightly lower rate than sales
• EBIT: in a range between € 395 million and € 415 million 
• Net earnings: significant improvement

Cover Picture Credits: Getty Images

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

Nine Months 2019

Sales in the first nine months of 2019 rose by 16.0% currency adjusted to € 4,023.6 million (+17.6% reported). The strong sales development was largely driven by double-digit growth rates in Asia/Pacific, where China continued to be the main growth driver, and the Americas. EMEA grew at a high single-digit rate. The growth was driven by double-digit growth in all divisions: Footwear grew 13.5%, Apparel expanded by 22.4%, and Accessories increased by 10.3%. 

Wholesale continued to drive growth with an increase of 14.5% 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 21.3% currency adjusted to € 947.3 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 23.5% of total sales for the first nine months of 2019 (22.5% in the previous year). 

The gross profit margin improved by 60 basis points from 48.8% to 49.4% in the first nine months of 2019. Positive impacts from regional, channel and product mix, lower discounts as well as slightly positive currency impacts led to margin improvements. 

Operating expenses (OPEX) increased by 17.2% and amounted to € 1,620.7 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 28.4% from € 299.8 million last year to € 385.0 million in the first nine months 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 9.6% compared to 8.8% in the first nine months last year.

Net earnings rose by 39.0% to € 244.6 million (last year: € 176.0 million). This translates into earnings per share of € 1.64 compared to € 1.18 in the first nine months of 2018.

Working Capital

Inventories were up by 28.4% at € 1,140.8 million. Earlier purchase of products to balance supplier capacities and secure product availability, more retail stores in operation and the general sales growth led to the increase. In the third quarter, the latest currency developments as well as an increased front-loading of product for the United States prior to tariff increases further added to the development. Trade receivables rose by 13.1% to € 794.8 million. On the liabilities side, trade payables were up by 23.0% to € 722.1 million. This resulted in an increase of working capital by 20.1% to € 915.7 million. 

outlook 2019

The third quarter saw a continued strong increase in sales and profitability. Based on this and our expectations for the fourth quarter, we slightly adapt our guidance for the full year 2019. PUMA now expects that currency adjusted sales will increase around 15% (previous guidance: currency adjusted increase of around 13%). 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. As a consequence, we expect the operating result (EBIT) to come in between € 420 million and € 430 million, despite the negative impact from new tariffs in the fourth quarter in the United States (previous guidance: between € 410 million and € 430 million). In line with the previous guidance, management expects that net earnings will improve significantly in 2019.

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.