With growth in apparel and a positive kickoff of its basketball collection for North America, Puma sees a bright outlook for the rest of the year.
In a nutshell: Puma posted strong sales and profitability in the third quarter, which came in slightly above expectations. As a result, and based on the outlook for the remainder of the year, the company said it now expects sales to increase between 14 percent and 16 percent compared to its previous guidance for sales growth ranging between 12 percent to 14 percent.
Earnings before interest and taxes (EBIT) is now expected to come in between 325 million euros ($369.59 million) and 335 million euros ($380.97million) compared to previous guidance of 310 million euros ($352.54 million) to 330 million euros ($375.28 million).
Herzogenaurach, Germany-based company said the prelaunch of a basketball collection for North America at the end of the quarter created a lot of “noise” and, although it’s early, the sell-through of the first shoe model has been positive. This investment in performance basketball and the culture around basketball “is a strong commitment to both the performance and the sportstyle business in the North American market,” the company said.
Sales: Sales in the third quarter ending Sept. 30 increased 14 percent, to 1.24 billion euros ($1.41 billion), with double-digit growth in the Americas and Asia/Pacific regions. The apparel product segment was the main growth driver in the quarter, supported by new product launches in the Sportstyle, Teamsport and Motorsport categories. Footwear and accessories grew at a high single-digit rate.
Earnings: Net earnings increased 24.8 percent, to 77.5 million euros ($88.13 million), from 62.1 million euros ($70.62 million) a year earlier. EBIT improved 28 percent, to 130 million euros ($147.84 million), compared to 101 million euros ($114.86 million) in the year-ago period. Puma said this was due to strong sales growth combined with an improved gross profit margin. EBIT margin rose to 10.5 percent from 9 percent a year earlier. The company credited the increase to greater sales of new products with a higher margin and sourcing improvements.
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CEO’s Take: “The third quarter ended a little stronger than we had expected… further strengthened by a very positive development in apparel, which grew 27 percent in the quarter,” said Puma SE CEO Bjørn Gulden. “Although we saw very negative currency impacts in Turkey and Argentina, overall we experienced less headwind from currencies in sales than in previous quarters. We still see large shifts in product trends and consumer demand, but feel we have reacted fast enough to continue our growth.”