Boosted by double-digit growth across all regions and product divisions, Puma SE on Thursday said it is on track to achieve its medium-term goal of 10 percent earnings before interest and taxes margin by 2021-22 and average annual sales growth of 10 percent in constant currency.
Both apparel and footwear showed strong growth in the fourth quarter, rising 28.6 percent and 17.4 percent year-on-year respectively, the company said, with full-year sales in the sneaker category exceeding the 2 billion euro mark for the first time.
Net earnings in the three months to Dec. 31 leaped 624.7 percent to 15.7 million euros from 2.2 million euros in the same prior-year period, coming off a low base. Consolidated sales rose 17.9 percent to 1.22 billion euros.
In terms of markets, the Asia-Pacific region led the way, followed by the Americas.
The German sporting goods maker’s gross margin — a key indicator of profitability — in the period remained stable at 47.1 percent, despite negative currency impacts in the quarter, the company said.
Puma chief executive officer Bjørn Gulden, who has been steering the company’s turnaround since 2013, said there’s still “a lot to improve, but we feel we are moving our brand and company in a good direction.”
The response from analysts was mixed.
RBC’s Piral Dadhania highlighted in a research note that Puma’s EBIT guidance is 5 percent to 6 percent below consensus, at 430 million euros, at the midpoint, despite in-line top-line guidance.
“In the context of Q418 [operational expenditure] expansion, which reflects high cost to compete, this is consistent with our view that consensus margin expectations for FY19E-20E are too optimistic, as top-line trends moderate,” the analyst said.
Baader Helvea Equity Research described the numbers as “a convincing set of results,” with the sales guidance in-line with expectations, even if the group’s EBIT target “falls a bit short to our, as well as consensus, expectations.”
“But we are not worried, as — during the last two years — Puma management was always able to increase its initial earnings targets during the course of the relevant year,” the company said.
Coming off its 70th anniversary year, which saw the brand’s return to basketball, launching its first shoe in the category in 20 years — the Clyde Court Disrupt — together with creative director Jay Z, with the Selena Gomez-backed Phenom and Defy styles among bestsellers in the women’s category — net profit in the full year rose 38 percent to 187.4 million euros, while sales advanced 12.4 percent to 4.6 billion euros.
Other popular footwear styles included the chunky Nineties-inspired Thunder, RS-O and RS-X models.
Kicking off a series of investments and upgrades in its logistics operation, the company in 2019 will start work on a new multichannel distribution center in Geiselwind, Germany, which is expected to be operational in early 2021.