As It Closes Out ‘Most Difficult Year,’ Why Puma Is ‘Optimistic’ About 2021

Despite positive results in the third and fourth quarters of 2020, German sportswear brand Puma ended the year with sales down 1.4% to 5.23 billion euros.

During a presentation to reveal the results, Puma chief executive officer Bjorn Gulden outlined a rollercoaster year for the German brand, saying that “2020 was definitely the most difficult year I have ever experienced,” later adding, “it was the second quarter that wrecked everything.”

He was referencing a graph that showed how, last April at the beginning of the COVID-19 pandemic, sales plummeted 55.2% compared to the previous year. But by October, sales had shot up again to an increase of 25.1% compared to 2019. The company described the third quarter as the “best in Puma’s history.”

Overall, Puma sales grew 9% in the fourth quarter to reach 1.52 billion euros. Despite the patchy year, the company said it would propose paying out a small dividend to shareholders.

“It’s a sign that we are optimistic about the future, that we can afford to pay a dividend again,” Gulden said, adding that the dividend proposal was still dependent on how the situation developed before the company’s shareholder meeting in May.

Sales in the Asia-Pacific region saw 11.8% growth overall in the last three months of 2020 and hit 480.5 million euros. Much of this was driven by customers in Mainland China, who pushed sales to an increase of 24% in the fourth quarter, while elsewhere in the territory, they fell 3%. By the end of 2020, Mainland China was sitting on a sales increase of 3%, with the rest of Asia Pacific down 11%.

For the full year, sales in Asia Pacific fell 3.2%, compared to 2019 levels, to reach 1.48 billion euros.

Territories in Europe, the Middle East and Africa, or EMEA, also saw an increase in Q4, of 9.8% and equaling 492.1 million euros. Split into different areas, it was Europe that saw the largest troughs and peaks. In Q2 sales fell 34%, climbing back up to an increase of 19% in Q3, before ending the year with a 3% decrease for the full year, thanks to a renewed lockdown in the last three months of 2020.

Overall, EMEA was the only territory where sales grew in 2020, with a 1.5% increase to hit 1.98 billion euros.

For North America and Latin America, it was a similar story of ups and downs. Puma reported a 6.1% increase in sales, to 547.5 million euros, in Q4. But for the full year, the Americas ended 2020 on a negative note, with sales down 3% compared to 2019, totaling 1.78 billion euros.

Puma’s earnings before interest and taxes, or EBIT, also looked good in the fourth quarter, increasing by 14.6% to hit 63.3 million euros. However, positive third and fourth quarters were not enough to save the year. For 2020, EBIT was more than halved, ending at 209.2 million euros.

The fourth quarter saw positive sales results for all Puma products. Apparel rose by 15.7%, to 641.1 million euros, compared to the same quarter the previous year. Accessory sales increased by 7.3% to reach 238.2 million euros, compared to 2019, and footwear rose 3.8% to hit 640.9 million euros.

For the full year though, apparel sales decreased by 1.5% compared to 2019, to reach 1.97 billion euros and footwear was down 3.1%, hitting 2.37 billion euros. Part of the problem with footwear had been difficulties with supply, Gulden explained. Knowing how much to send to certain territories was difficult and initial conservative estimates, then shipping delays, meant there had been a shortfall in some stores. Only Puma’s accessories ended 2020 positively with 3.5% growth compared to the previous year and sales of 892 million euros.

The same rollercoaster pattern could be seen in Puma’s channel development. When the pandemic first hit in Q2, the sportswear brand’s online sales rocketed up 97% compared to online sales in 2019, while brick-and-mortar retail and wholesaling fell.

Over the next two quarters, Puma’s e-commerce evened out, adding up to 62.9% growth for all of 2020, compared to 2019. Direct-to-consumer sales, which include e-commerce and 879 Puma-owned-and-operated stores around the world, make up 27% of all the brand’s sales.

After discussing the ups and downs of 2020, Gulden was happy to forecast the company’s future. There would be more focus on the female market and being “fashion forward”, on running for both daily joggers and elite athletes, and on basketball in North America.

“Over the last 30 months, we have invested heavily in players and the culture, and we’ve seen a very impressive result,” Gulden boasted. The Dreamer basketball shoe, a signature model made in collaboration with the hip-hop artist J. Cole, had been one of Puma’s most successful launches and sold out almost immediately, he noted. Puma was also working on a signature shoe, the MB1, for another basketball signing, LaMelo Ball, who’s in line to become the NBA’s Rookie of the Year.

Golf was another growing focus with Puma planning on selling the world’s first 3D-printed golf putter this year.

Additionally the company planned to act more regionally, designing products particular to local consumers. “There will be more of what I’d call regional ranges — where there are opportunities to develop products specific to the market, without spending time and energy trying to make it global,” Gulden explained, referring to Chinese customers’ desires for Chinese references in products. “I think you’re going to see an acceleration of that everywhere,” he suggested.

Gulden expressed optimism about the coming year, noting that orders on hand were already up 29.1% for the first three-quarters of 2021, compared to 2020.

At the same time, it remained difficult to know what would happen next, he argued. Ocean freight prices were rising steeply and stores were still closed, mostly in Europe, while retailers in other territories continued to operate under restrictions.

“It’s just very, very difficult to give a prognosis when we don’t know if the stores are opening,” Gulden stated. “But it is better than last year because we have the vaccine and there is an improvement in the general direction. The next six weeks will be bumpy in Europe — and how good the recovery is will depend on the pandemic. Take the pandemic out of the equation, and we would be in a very good position,” Gulden said.

Puma is still growing faster than its larger competitors in the sportswear market. “But the reason we’re not more bullish in our outlook is because, you know, you don’t want to promise more than you can deliver,” the CEO added.

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

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