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Puma Sees Best-Ever First Quarter on Sales Growth in Asia, North America

After reporting a double-digit increase in sales at the end of FY18, Puma appears to have maintained its momentum with consumers, leading to a company record in sales for the first quarter of FY19.

In a Nutshell: Puma is continuing on its consecutive quarters of double-digit growth, posting its best ever first quarter, with record-high revenues.

Also over the first quarter of Puma’s FY19, the brand announced that it would be the official apparel partner for a pair of popular soccer clubs in Manchester City and Valencia CF. Puma will also be the exclusive merchandise and “trackside retail partner” for Formula 1 cart racing, going forward.

Sales: Puma’s sales increased 15.3 percent in the first quarter of FY19 for a total of 1.319 billion euros ($1.47 billion), up from 1.131 billion euros ($1.26 billion) during the same time frame last year and beating the average analyst estimate of 1.284 euros ($1.44 billion). The brand’s gross profit margin rose 80 basis points in Q1 to 49 percent.

Puma owed the quarter’s sales success to the double-digit growth it recorded in the Asia/Pacific and Americas regions. Success in Asia, Puma said, was largely driven by China and EMEA sales “increased solidly,” too. Puma’s main growth driving category for Q1 was apparel, the company said in a statement, followed by accessories and footwear. Running and training, teamsport, motorsport, golf and “sportstyle” all contributed to growth, too, Puma said.

The company’s working capital rose by 7.1 percent to 846.9 million euros ($946.88 million)—alongside 19.3 percent growth in inventory during the quarter, for a total of 907.5 million euros ($1.014 billion). Puma said this was due to managing supplier capacities in order to prepare for growth in demand during subsequent quarters. Puma maintained its previous guidance of 10 percent sales growth throughout FY19.

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Earnings: Puma’s EPS for the first quarter was 6.31 euros ($7.05), up from 4.51 euros ($5.04) in the brand’s previous first quarter, an increase of 28.5 percent and better than the analyst estimate of 5.79 euros ($6.47). Net earnings totaled 94.4 million euros ($105.54 million) in the quarter from 67.4 million euros ($75.36 million) in FY18.

The brand maintained its expectation of “significant improvement” in its net earnings by the end of FY19.

CEO’s Take: Puma CEO, Bjørn Gulden, took the occasion of the brand’s best-ever quarter of sales to stand pat and back previous guidance.

“The first quarter of 2019 was the best quarter Puma has ever seen. Revenue of 1,319 million euros ($1,474 million) is the highest Puma has ever achieved in a quarter and the EBIT of 143 million euros ($159.88 million) was also the highest absolute EBIT Puma has ever achieved. So, it has been a very good start into the year,” he said. “The growth in all regions and all product divisions shows that we continue to make progress. Even if we have nine more months to go and despite a lot of uncertainty in the market, we feel comfortable that we will achieve our guidance for the full year.”