Puma has returned to the trajectory it was on before the COVID-19 pandemic hit, reporting that revenues leaped 95.8 percent in the second quarter to 1.59 billion euros, and upgrading its outlook for the rest of the year.
The German activewear firm trumpeted double-digit increases in all regions and product segments. Sales in the first half amounted to 3.14 billion euros, an increase of 54 percent compared to 2020.
Compared to 2019, the last “normal” year for clothing and footwear sales, first-half revenues advanced more than 30 percent.
“It’s a good confirmation that the momentum of Puma continues,” the company’s chief executive officer Bjorn Gulden told journalists. “I’m very, very happy. We have actually used the COVID-19 time to strengthen our performance, which I think is an extremely strong achievement.”
The company upgraded its outlook and predicted growth of around 20 percent for the whole year. Previously it had forecast increases in the mid-teens.
Due to the pandemic, consumers were more interested in activewear in all categories, including performance, lifestyle and what Gulden described as “comfort” clothing.
North America posted the strongest growth in the second quarter with sales rocketing 181.8 percent to 675.6 million euros. Previously, Europe always generated most of Puma’s revenues. In this quarter, sales in Europe, Africa and the Middle East came to 572.4 million euros.
This was not as a result of lockdowns in different areas, Gulden said. Rather it is the result of long-term and targeted marketing aimed at American consumers, he explained.
“It’s clear that our retail partners have had more success with Puma over the last 24 months than before,” he told WWD. “I think, as a brand, Puma has become more accepted by American consumers. There’s more demand in more categories, and from more retail partners than ever before.”
The biggest problem in the North American market now is getting product there — freighting into the U.S. has been more congested than in other territories, the executive noted.
In the Asia Pacific region, Puma’s second-quarter sales were 341.2 million euros, an increase of 29.6 percent on 2020. Sales in the region were impacted by political tensions and a boycott of Western-made goods by Chinese consumers at the end of March.
“We saw sales and traffic falling there very, very sharply,” Gulden said. Worst impacted were e-commerce sales and Puma ended the second quarter in China with sales down 5 percent. “There’s no doubt our normal trajectory in China would have been 25 to 30 percent growth but we lost business in that quarter,” the executive noted.
The Puma boss believes that the situation is now improving. “We have to work around this as best we can,” he concluded.
The biggest problem for the company now is supply chains hit by the health crisis, he continued.
Puma had been helping staff members get vaccinated. For example, in hard-hit India, almost all Puma employees had their first jab and 20 percent were fully vaccinated. “We’re doing that everywhere,” Gulden said. “It’s very important for the health of our staff but also to keep our business going.”
Vietnam is another trouble spot. Puma sources around one-third of its global supply out of Vietnam and COVID-19 surges in that country have seen factories in the south closed for the past 10 days, even while those in the north keep producing.
Gulden said that impacts around 15 percent of Puma’s global production.
“A decision will be made next week [about regional lockdowns in Vietnam], but I think there are strong indications it will last longer than two weeks,” the executive noted, adding that they were looking into shifting production to northern Vietnam, China and Indonesia in the meantime.
The company swung back to profitability in the second quarter. EBIT — earnings before interest and taxes, and an important indicator of how well a business is doing — came in at 108.9 million euros, a significant improvement on the pandemic-impacted second quarter of 2020 when losses totaled 114.8 million euros. It was also a 35.6 percent improvement on 2019’s second quarter, when Puma’s EBIT was 80.3 million euros.
This meant that for the first half of the year, Puma’s EBIT was 263.2 million euros, compared to a loss of 43.6 million euros last year and EBIT of 222.8 million euros in 2019.
Previously, Puma had only predicted “significant improvement” in EBIT. The company is now forecasting EBIT of between 400 million and 500 million euros for the whole of 2021.