Puma reports 5.9 percent rise in H1 sales

In the second quarter of 2015, Puma’s consolidated sales improved by 7.6 percent currency adjusted to 772.7 million euros (844.8 million dollars). This positive development was primarily driven by the growth in footwear sales across all regions. In reported terms, consolidated sales rose by 18.5 percent. In the first half-year 2015, consolidated sales increased by 5.9 currency adjusted to 1,594.1 million euros (1,742.8 million dollars). In reported terms, the improvement is significantly higher with an increase of 15.7 percent.

Second-quarter sales for the EMEA region (Europe, Middle East and Africa) rose by 3.9 percent. The development was particularly encouraging in Germany, France and Turkey, while Italy and Switzerland suffered a decline on high comparables with sales during last year’s World Cup not repeating this year. Sales performance in the Americas was stronger with growth in both, North and Latin America. Currency adjusted sales increased by 11.6 percent. Argentina and Mexico showed above average sales developments. Asia/Pacific (APAC) showed a satisfying performance, with sales rising by 6.2 percent currency adjusted on the back of good performances in China and India, each reporting double-digit growth.

Sales in footwear increased for the fourth quarter in a row, rising by 16.2 percent currency adjusted to 358.8 million euros (392.3 million dollars). This development was mainly driven by the Running, Training and Sportstyle categories and especially the Puma Ignite product platform. Apparel sales were broadly flat at 263.3 million euros (287.8 million dollars). Accessories grew by 3.6 percent currency adjusted.

Gross profit margin was stable at 46.7 percent, despite significant negative currency effects. The footwear gross profit margin decreased slightly from 42.7 percent to 42.3 percent, the apparel margin rose from 48.2 percent to 50.7 percent and the margin for accessories fell from 52.4 percent to 50 percent. The rise in operating expenses led to a decrease of operating income (EBIT) from 12.6 million euros (13.7 million dollars) to 6.8 million euros (7.4 million dollars).

In the first half, the EMEA region sales rose by 1.8 percent currency adjusted. Germany, France, Spain and Turkey showed a positive development in Europe, while the Middle East and Africa regions continued their solid performance. In the Americas, sales grew by 8.7 percent. Argentina and Mexico stood out within the Latin American region, driving double-digit growth, while North America was growing at a mid-single-digit pace with acceleration in the second quarter. Asia/Pacific also developed well, with an increase of 8.6 percent currency adjusted. Performances in China and India were strong, while sales in Japan were stagnant and Korea declined in a difficult economic environment.

In terms of product segments, footwear was positively impacted by the successful launch of the Puma Ignite product platform, leading to an overall increase of 11.7 percent currency adjusted with the running, training, and football categories being the main growth drivers. Apparel also grew with sales rise of over 2.7 percent, while accessories decreased slightly by 0.9 percent.

Supported by the increased number of stores operating - 44 more stores compared to one year ago; 4 less than at the end of 2014, retail sales increased by 9.3 percent currency adjusted in the first half of 2015. This represented 20.2 percent of total sales compared to 19.6 percent last year. PUMA’s gross profit margin for the first half-year went down by 90 basis points to 46.8 percent. The footwear gross profit margin decreased from 43.4 percent to 42.6 percent, apparel margin was largely stable at 50.7 percent and the margin for accessories decreased from 50.9 percent to 49.8 percent. Half-year consolidated net earnings came in at 21.5 million euros (23.5 million dollars), representing earnings per share of 1.44 euros (1.57 dollars) compared to 2.66 euros (2.91 dollars) in the prior year.

The new in-store concept for Puma’s own retail was first revealed in its full price store in Herzogenaurach earlier this year. Since then further stores have been opened, in Hong Kong, Turkey and Mexico. The company expects an increase in the medium single-digit range for full-year currency-adjusted net sales. For the second half of 2015, it anticipates higher sales growth in Q4 than in Q3.

The adverse developments of foreign exchange rates since the beginning of the year, particularly the strengthening of the US Dollar versus nearly all other currencies, had a significant negative impact on Puma’s reported gross profit margin and continues to expect a drop in the gross profit margin for the full year in a range of 100 to 150 basis points versus last year. However, Puma’s expectation for a full-year EBIT falls in a range between 80 million euros (87.4 million dollars and 100 million euros (109.3 million dollars), with net earnings impacted accordingly.