Puma reiterated its outlook for the year despite market volatility while announcing another record quarterly sales and EBIT performance in the third quarter ending September 30. the Americas region and 18.5% in the EMEA region.
Third Quarter 2022 Highlights
- Sales increased by 16.9% adjusted for exchange rate (ca) to €2,354 million (+23.9% as reported/Q3 2021: €1,900 million);
- Gross profit margin decreased to 46.8% (Q3 2021: 47.4%);
- Operating expenses (OPEX) increased by 25.8% to €853 million (Q3 2021: €678 million);
- Operating profit (EBIT) improved by 12.6% to EUR 258 million (Q3 2021: EUR 229 million), resulting in an EBIT margin of 10.9% (Q3 2021 : 12.0%); and
- Net profit increased by 1.8% to EUR 146 million (Q3 2021: EUR 144 million).
Highlights of the nine months of 2022
- Sales increased by around 18.2% to €6,269 million (9M 2021: €5,038 million);
- Gross profit margin decreased to 46.8% (9M 2021: 47.8%);
- Operating expenses (OPEX) increased by 22.2% to reach 2,357 million euros (9M 2021: 1,930 million euros);
- Operating profit (EBIT) improved to €600 million (9M 2021: €492 million), resulting in an EBIT margin of 9.6% (9M 2021: 9.8% ); and
- Net income improved to €352m (9M 2021: €302m).
Bjørn Gulden, CEO of Puma SE, said: “Despite all the global uncertainties, the third quarter was again a very good quarter for us. With sales up 24% in euros to 2,354 million euros and EBIT up 13% to 258 million euros, this is the best quarter in Puma’s history. Improved product availability thanks to a more stable supply chain, better than expected sales and the continued momentum of the global Puma brand overcompensated for all negative external factors. In the first nine months, we achieved sales growth of 24% in euros (around 18%) to 6,269 million euros and an EBIT of 600 million euros.
“Our performance categories like running, soccer and basketball continue to do very well. We are still seeing strong demand for shoes, but we are also seeing that high inventory levels in the market, especially for apparel, have led retailers to order more cautiously than a year ago. With nearly all of our markets up double digits, we continue to see a strengthening of the Puma brand and our sales globally.
“We expect continued volatility in the market during the fourth quarter, but we are confident that we can deliver within our full year outlook.
“We will also continue our people-centric approach and will always prioritize the health and safety of our employees and make no savings on anything. At this time, this is especially true for our people and their families in Ukraine, who have our full sympathy and support. At the same time, we will also continue to invest in our people, brand and infrastructure, as growing sales and increasing market share will be more important than maximizing profits in the short term.
Third quarter 2022
- Sales increased 16.9% (approx.) to €2,354.4 million (+23.9% reported), representing the highest quarterly sales in Puma’s history. The Americas region recorded strong sales growth of 18.8% adjusted for currency effects. Sales in the EMEA region increased by 18.5% excluding currency, driven by strong growth in almost all key markets in Europe. The Asia/Pacific region recorded sales growth for the first time this year (+9.8% excluding currency). While the COVID-19 containment measures further impacted business in Greater China, other key markets in Asia/Pacific saw strong growth. Footwear sales were up 33.2% (ca) and apparel sales were up 9.9%, adjusted for currency effects, driven by continued strong demand for its performance categories, including running and training, team sports, basketball and sports style. Accessories sales were down 10.2% after adjusting for the exchange rate due to softer leg and underwear business, particularly in North America.
- Puma’s Wholesale business increased by 19.9% (sales) to €1,864.6 million and its DTC business increased by 6.5% (sales) to €489.7 million. Sales at owned and operated retail stores increased 4.2% (ca) and e-commerce increased 11.8% (ca). Puma said in its press release: “We continued to focus on our strategy of being the best partner for our retailers, which supported the strong growth of our wholesale distribution channel. At the same time, better product availability drove DTC’s stronger growth, primarily in e-commerce.
- Gross profit margin decreased by 60 basis points to 46.8%, mainly due to higher supply prices due to raw materials and freight rates and an unfavorable channel mix, while Price and currency adjustments had a positive impact.
- Operating expenses (OPEX) increased by 25.8% to €853.2 million due to higher marketing expenses, more retail stores in operation and related distribution costs to higher sales. Due to continued operational inefficiencies due to COVID-19, particularly in supply chain and warehousing, the OPEX ratio increased to 36.2% (Q3 2021: 35.7%).
- Operating profit (EBIT) increased by 12.6% to EUR 257.7 million (Q3 2021: EUR 228.9 million) and the EBIT margin was 10.9% ( Q3 2021: 12.0%).
- Net profit increased by 1.8% to EUR 146.4 million (Q3 2021: EUR 143.8 million), reflecting a lower financial result due to currency effects. As a result, earnings per share amount to €0.98 (Q3 2021: €0.96).
Nine months 2022
- Sales increased by 18.2% (approximately) to €6,268.5 million (+24.4% reported). The Americas led growth with a 28.1% (ca) increase in sales, followed by EMEA, with all key markets in Europe contributing to strong growth with a 21.4% (ca) increase in sales. sales. Sales in the Asia/Pacific region were down 3.7% (ca) due to geopolitical tensions and COVID-19 containment measures in Greater China, while other major Asia/Pacific markets declined. experienced strong growth. All product divisions posted strong growth, with footwear growing 24.0% (sales), apparel 14.7% (sales) and accessories 8.9% (sales).
- The wholesale activity increased by 21.8% (sales) to 4,956.0 million euros and its DTC activity increased by 6.4% (sales) to 1,312.5 million euros, with a growth in owned-and-operated retail stores (+11.1% sales) and a decline in e-commerce. (-2.1% approximately).
- Gross profit margin decreased by 100 basis points to 46.8% (9M 2021: 47.8%), mainly due to an unfavorable geographic and channel mix and higher supply prices due to raw materials and freight rates, which were partially offset by currency and price adjustments.
- Operating expenses (OPEX) increased by 22.2% to €2,357.3 million (9M 2021: €1,929.5 million). Higher marketing expenses, a higher number of retail stores in operation, higher sales-related distribution and warehousing costs, and operational inefficiencies due to COVID-19 contributed to this increase; however, the respective OPEX ratio decreased to 37.6% (9M 2021: 38.3%) due to higher sales growth and continued OPEX control.
- Operating profit (EBIT) increased by 22.0% to EUR 600.1 million (9M 2021: EUR 492.1 million) due to strong sales growth and continued OPEX control . Consequently, the EBIT margin was 9.6% (9M 2021: 9.8%).
- Net profit increased by 16.7% to €352.1 million (9M 2021: €301.7 million), and earnings per share were €2.35 (9M 2021: 2.02 €).
Working capital increased by 86.2% to €1,339.0 million (September 30, 2021: €719.0 million). Inventories increased by 72.3% to €2,350.2 million (September 30, 2021: €1,363.9 million). Current inventory levels are impacted by currency effects, rising raw material prices, freight rates and past product purchases. Additionally, the third quarter of last year was relatively weak due to COVID-19-related factory shutdowns in South Vietnam. Trade receivables increased by 21.9% to EUR 1,290.3 million (September 30, 2021: EUR 1,058.6 million), mainly due to strong sales growth. On the liabilities side, trade payables increased by 50.5% to €1,810.2 million (September 30, 2021: €1,202.8 million).
Puma said: “Puma achieved record sales and EBIT in the first nine months of 2022 thanks to continued brand momentum, successful product launches and the best possible service for our retail partners and customers. consumers.
“While the first nine months of the year have been strong for Puma, we continue to navigate a highly uncertain geopolitical, macroeconomic and competitive environment. The situation in Ukraine, a global energy crisis, persistent inflation and rising interest rates lead to uncertain consumer behavior and volatile demand. COVID-19 related restrictions are still impacting business in Greater China, and rising freight rates and raw material prices continue to put pressure on margins. At the same time, overall inventory levels increased at both retailers and brands. Higher inventory levels, combined with market uncertainty and volatility, are leading to increased promotional activity and retailers are ordering later and more cautiously.
“Despite the highly uncertain environment, Puma reiterates its 2022 outlook of currency-adjusted mid-teen sales growth and operating profit (EBIT) of between €600m and €700m (2021: EUR 557 million. Puma’s net profit is expected to improve accordingly. The evolution of the gross margin and OPEX ratio will continue to largely depend on the magnitude and duration of the negative impacts described above.
“Consistent with previous expectations, Puma believes that inflationary pressures from rising freight rates and raw material prices, as well as operational inefficiencies from COVID-19 and the Ukraine crisis, will dilute profitability in 2022.
In line with the strategy, Puma will continue to focus on managing near-term challenges without compromising the brand’s mid-term momentum. Therefore, sales growth and market share gains will take priority over short-term profitability. The strong and profitable growth in the first nine months of the year, a solid order book, an exciting product line, as well as very good feedback from retailers and consumers, make us confident for success and growth in the future. Puma’s medium term. .
Photo courtesy of Puma