Puma Is Cautiously Optimistic Despite Experiencing ‘Most Difficult Quarter’

The coronavirus pandemic sent sales at German sportswear brand Puma down by 15.4% over the first half of 2020 to 2.13 billion euros. Last year, they increased by around the same percentage — 15.5% — to reach 2.54 billion.

Net losses added up to 59.4 million euros, compared to earnings of 144.1 million euros in 2019.

“I have to admit this has been the most difficult quarter I have ever experienced in this industry,” Puma CEO Bjørn Gulden told journalists. “This was not something I had ever expected to experience. But here we are.”

Sales for the second quarter had fallen 30.7%, currency adjusted, to 831.1 million euros. Last year during the same quarter, sales had totaled 1.22 billion euros after a rise of 15.7%.

Despite all the bad news, Gulden pointed out that the latest numbers were also cause for cautious optimism. Sales in April and May had plummeted, falling 55.2% and 37.5%, respectively, compared to the previous year, but June had been a better month, down only 6%. And, right up until yesterday, July’s sales were back to being “flattish,” he said.

Watch on FN

“These are terrible numbers in absolute terms,” Gulden argued, “but they are a lot better than we had expected when we saw the April and May numbers. I am actually very happy with the way that Q2 business has developed. We’ve gone from minus 55 [%, in sales] to flat within three months.”

The company could even be back to normal growth by the end of the year, he suggested. “But then, if you look at the global situation, with high numbers of infected people everywhere, it’s difficult to say if this trend will continue.”

Market analysts from JPMorgan, Jefferies and Baader Bank appeared to agree with that assessment, judging that the second-quarter results were roughly in line with, or slightly better than, expectations.

The same rise-and-fall pattern occurred in all territories. In North America, April sales were down 64%, but only down by 9% by June. In Europe, sales plummeted 65% in April, but only 15% in June.

Although almost all of Puma’s own stores around the world are open again, the end result was double-digit declines in Q2 in all territories. Europe, the Middle East and Africa were down 30% to 308.5 million euros and the Americas down 43.1% to 254.3 million euros.

Puma had previously expressed hopes that a second-quarter recovery might be led by mainland China reopening after the lockdown. It was the one territory in which sales did improve, rising 15.6%. But the second-quarter numbers for all of Asia-Pacific still declined 14.2% to 268.3 million euros because of ongoing pandemic-related closures in Japan and India.

In currency-adjusted terms, footwear sales fell 15.2%, apparel slumped 18.6% and accessories dipped 9%. Gulden attributed the differences in downturns to the fact that consumers were more interested in exercising than looking trendy during the lockdown.

Puma had taken a number of measures to try and manage the crisis without hampering the brand’s ongoing mid-term success. Up until the pandemic, Puma had been advancing steadily, marking more growth than its much bigger competitors, Adidas and Nike. Short-term measures this year have included negotiating more favorable terms with suppliers, obtaining a revolving credit facility of 900 million euros, reducing costs as much as possible and streamlining e-commerce offerings.

Online sales grew 97.1% in the second quarter alone, adding up to 139 million euros in sales. That equaled a rise of 69.8% and 223 million euros in sales for the first half of this year.

Unlike some other brands, Puma had not been quite as prepared for the rapid uptake of e-commerce channels, Gulden explained, so did not market that sales avenue aggressively. Certain logistical issues had to be resolved first and there are 18 different projects under way to deal with those. But this also shows how much untapped potential e-commerce has for Puma, Gulden argued.

The company also stressed a more local approach. “Different markets will go through these phases [of lockdown] at different times and execution therefore must be very locally driven,” Puma explained.

Ongoing insecurity meant that Puma would not be able to make any reliable predictions for its financial outlook this year.

The company has stated ambitions to grow 10% every year and Gulden believes the sportswear sector will eventually benefit from an increased consumer focus on health and fitness, as well as the desire for more casual clothing. But for now, “2020 is a lost year,” he said. “It’s about staying on our toes and trying to get through it as good as we can. That’s not really in our hands. It depends on how the virus develops.”

This story was reported by WWD and originally appeared on WWD.com.

Access exclusive content