BERLIN — Puma continued a multi-year, record-breaking sprint in 2021, the company said Wednesday. And while sales fell in China due to political tensions, Puma said it had made up for that decline with increased business in the Americas.
“Despite all the issues and obstacles related to COVID-19 and political tensions around the world, we had the best year in Puma’s history,” chief executive officer Bjørn Gulden said in a statement.
The fourth quarter last year, during which currency-adjusted sales grew 14.3 percent to 1.77 billion euros, topped off a dynamic 2021, which saw the company raise guidance almost every quarter. For the full year, sales grew 31.7 percent to 6.8 billion euros.
Gulden noted that this performance wasn’t achieved just because revenues plummeted during the COVID-19 pandemic, then shot up again as things normalized.
Even compared to pre-pandemic numbers in 2019, sales increased 30 percent, he pointed out. “[These] are results that we are proud of,” he stated.
Puma has set a goal for itself of growing around 10 percent a year and aims to reach sales of 10 billion euros by 2025.
The company’s sales were driven by the Americas, where revenues grew 31.3 percent in the fourth quarter to 727 million euros.
Previously Europe has traditionally been Puma’s biggest market. In Europe, Africa and the Middle East, sales grew 14.9 percent in the fourth quarter to 573.3 million euros. For the full year, sales in the territory rose 28.2 percent to 2.53 billion euros altogether.
But the Americas have been catching up to Europe for some time as a result of the company’s long-term marketing focus on U.S. customers.
The full-year figures indicated how that tactic has paid off. In 2021, Puma sales in the Americas grew 53.9 percent to total 2.64 billion euros.
Before the health crisis began, Puma had been recording growth of around 20 percent in the Americas and sales of around 2 billion euros in 2019.
Basketball – the company calls its collection Puma Hoops – has been particularly successful for the brand in the U.S., Gulden explained, before showing journalists a promotional video, complete with cursing hip-hoppers and cool graphics.
“Very cool, very American,” the Puma boss mused afterward.
“The investment is big and Jay-Z has really helped us put this all together,” Gulden continued, referring to the fact that the American music mogul has acted as creative director for Puma’s basketball range since 2018. “Without him, I think it would have been very difficult for us, a German company, to have that success.”
The idea is to connect to the American culture of basketball, then capitalize on this to sell classic Puma basketball shoes from the ’70s through to the ’90s, Gulden explained. About 70 percent of sales of Puma fashion shoes are out of this classics category.
Additionally, one of Puma’s basketball signings is LaMello Ball, the NBA’s Rookie of the Year in 2021. “His [signature] shoes sell out in one to three days everywhere,” Gulden added.
Thanks to 2021’s results, Puma was optimistic about this coming year, despite forecasting that its momentum would slow somewhat. The company predicted growth to steady at around 10 percent in the upcoming year.
Market analysts from the likes of Goldman Sachs, Deutsche Bank and the Royal Bank of Canada said the full year results were as expected but expressed some disappointment with the company’s forecast, which was just below consensus. Then again, Piral Dadhania of the Royal Bank of Canada cautioned, Puma is known for more conservative guidance.
Puma also predicted increased participation in sports worldwide as well as ongoing trends in footwear and casualization, all of which made the sector’s future look bright.
But there would be challenges too, Gulden cautioned. These include inflationary pressures, which might potentially mean price rises later in 2022, as well as freight and logistics challenges caused by the pandemic.
The road bumps also include the ongoing consumer boycott of Western-made goods in China, which dragged down results from other parts of the region. In the fourth quarter, Puma sales in Asia fell 5.4 percent to 466.5 million euros.
For the full year, Puma recorded an increase of 10.6 percent in sales in Asia, totaling 1.64 billion euros. However if Chinese sales were subtracted from that total, revenue actually grew 19 percent, currency adjusted, in other parts of Asia over the course of 2021. In China, they fell 6 percent.
Gulden said he couldn’t promise growth in China in 2022. The company still couldn’t do any marketing with Chinese celebrities or influencers. “If you use Chinese celebrities, you get a s–t storm on social media,” he explained. “That’s not good for the celebrity or the brand.”
The situation was slightly different for marketing with Chinese athletes and Gulden said he hoped political tensions there would ease eventually.
“The good thing is that we have been able to replace the lack of growth in China by an accelerated growth in North America,” Gulden concluded.
During the press conference, Gulden credited Puma’s business agility and the ability to pivot between markets for the brand’s success in 2021.
He also felt the brand’s increasingly diverse portfolio played an important part: Cricket in India, a women’s Formula 1 team, a range of house slippers for lockdown (Puma has sold almost a million pairs of the slippers, named Scuffs, in six months) and a new focus on the increasingly popular sport of padel tennis as well as more outdoor offerings were all part of ongoing plans.
“As of two days ago, we also signed the best chess player in the world – five-time world champion, [Norwegian] Magnus Carlsen,” Gulden said, laughing a little. “We will ask him to create content with our other ambassadors so you will see some surprising stuff coming out of our relationship with him.”
In terms of product segments, clothing, footwear and accessories all grew by around a third over the year, increasing 28.6 percent, 36 percent and 27.2 percent, respectively.
Footwear remains Puma’s biggest seller and brought in 3.16 billion euros in 2021, followed by clothing sales of 2.52 billion euros. Accessories generated 1.12 billion euros for the full year.
Other important numbers were also positive. The company reported EBIT – earnings before income and taxes and an important indicator of how well a business is doing – of 557.1 million euros for the full year. That represents a significant increase of 166.3 percent on 2020, when EBIT equaled just 209.2 million euros. It also improves on Puma’s pre-pandemic EBIT of 440 million euros in 2019.
For 2022, the company predicted EBIT of between 600 and 700 million euros.