PUMA - Continued Sales Growth and Further Improvement of Operating Result in Third Quarter
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Herzogenaurach, November 10, 2016
2016 Third Quarter Facts
· Sales increase by 11% currency adjusted to € 990 million (+8% reported) with growth across all regions
· Improved sell-through in own retail and at key retail partners
· Gross profit margin flat at 45.8% despite stronger US-Dollar
· Moderate increase in OPEX of 4%
· Strong improvement (+47%) in operating result (EBIT) to € 60 million
· Great performance of PUMA athletes at the Rio Olympics with sprint star Usain Bolt dominating the event and winning three gold medals for the third consecutive time
2016 Nine Month Facts
· Sales up 10% currency adjusted to € 2,669 million (+6% reported) based on growth across all regions and product segments
· Slight decrease of gross profit margin to 46.1%, caused by stronger US-Dollar in 2016 compared to last year
· Improved operating leverage with OPEX increasing by only 3%
· Operating result (EBIT) up 33% to € 114 million
· Earnings per share at € 4.48 compared to € 2.77 last year
· Continued strong visibility of PUMA’s women’s category through FENTY PUMA by Rihanna fashion shows in New York and Paris and launch of the “DO YOU” communication platform with model, actress and activist Cara Delevingne
Bjørn Gulden, Chief Executive Officer of PUMA SE:
“We have seen a solid improvement in the sell-through of our products at retail in the third quarter. New product lines like the Fierce, the Platform, the Ignite Dual and the Fenty lines have shown to be “right” for the consumers and our marketing with personalities like Rihanna, Kylie Jenner, Cara Delevingne and, of course the unbelievable performance of Usain Bolt, have increased our brand heat. More consumers are buying our new products at full price and retailers are therefore more satisfied with us. It is now our job to use this momentum to get more of the right PUMA products on their shelves.
Sales developed a little better than expected, gross margin came in as expected and this combined with a strong discipline on the cost side resulted in a nice improvement in our earnings. With three months to go we feel confident in fulfilling our guidance and do now
expect our full-year EBIT to be in the upper half of the already communicated range of € 115 million to € 125 million.”
Third Quarter 2016
Sales:
PUMA continued on its growth path in the third quarter 2016. Sales increased by 10.7% currency adjusted to € 990.2 million (+8.3% reported). All regions contributed to this growth with EMEA and the Americas being the main drivers. Footwear once again performed
particularly well with a currency adjusted increase of 16.4%.
The EMEA region continued its growth, supported by strong demand for footwear products. Sales rose by 11.9% currency adjusted to € 408.6 million (+8.7% reported) with France and Germany being particularly strong.
Sales in the Americas region improved by 12.2% currency adjusted to € 342.9 million (+5.5% reported). Solid growth was delivered by both North and Latin America. However, the weakness of Latin currencies, notably the Argentine Peso, continued to impact the sales development in Euro terms.
The Asia/Pacific (APAC) region achieved sales of € 238.7 million, representing a rise of 6.9% currency adjusted (+11.7% reported). China and India delivered double-digit growth.
Footwear continued to drive the strongest growth among the three product segments, showing an improvement of sales for the ninth quarter in a row. Sales were up 16.4% currency adjusted (+12.3% reported) and amounted to € 458.8 million, with success coming from the Ignite franchise as well as Fierce and Fenty products within the Running, Training and Sportstyle categories.
Coming in at € 377.4 million, sales in the Apparel segment increased by 10.3% currency adjusted (+8.8% reported). Major gains were achieved in the Sportstyle category supported by our women’s business.
The development of Accessories was impacted by a weaker performance of PUMA’s accessories business in the United States. Sales decreased by 2.4% currency adjusted to € 154.0 million (-3.2% reported).
Gross Profit Margin and Operating Expenses:
In spite of the ongoing negative currency impact from a stronger US-Dollar, PUMA managed to maintain the gross profit margin at 45.8%. This was achieved mainly through sourcing improvements, selective price adjustments, and an improved Footwear product mix. The
Footwear margin increased by 190 basis points from 41.2% to 43.1%. The Apparel margin decreased from 49.8% to 48.2% and the Accessories margin fell from 49.1% to 48.4%.
Operating expenses (OPEX) rose moderately by 4.1% to € 397.4 million. This increase is mainly due to additional marketing costs associated with the Olympic Games in Rio as well as the expansion of our owned and operated retail store network. Other operating functions
maintained strict cost control and kept costs stable.
Operating Result and Net Earnings:
The operating result (EBIT) went up by 46.7% to € 60.3 million. This is mainly due to the operating leverage as sales grew stronger than operating expenses, while the gross
profit margin remained flat.
Net earnings nearly doubled compared to last year´s result coming in at € 39.5 million, representing an increase of 98.0%. This result translates into earnings per share of € 2.64 compared to € 1.34 in the third quarter of 2015.
Nine Months 2016
Sales:
As PUMA was able to keep up the strong momentum seen in the first half-year 2016, sales for the nine-month period improved by 10.2% currency adjusted to € 2,668.5 million (+6.4% reported). The main drivers behind this positive development were EMEA and APAC
and in segment terms Footwear and Apparel.
The growth dynamic in the EMEA region was particularly high, where sales went up 13.2% currency adjusted to € 1,084.3 million (+9.8% reported). This increase is largely due to the performance of France and the DACH area (Germany, Austria, Switzerland) which achieved a double-digit growth. Within the EEMEA region, Russia and South Africa performed very well. Apparel achieved major gains, partly driven by the football business.
In the Americas region, both North and Latin America posted a solid upturn in currency adjusted sales, increasing by 7.6% to € 946.6 million. In Euro terms, however, sales grew only by 0.4%, as the weakness of currencies in Latin America, notably in Argentina, continued to have a negative impact on reported sales.
The development of sales in the Asia/Pacific (APAC) region was particularly positively influenced by China, which performed strongly across all distribution channels. The region’s sales improved by 9.3% currency adjusted to € 637.7 million (+10.3% reported).
All product segments performed well in the nine-month period. Footwear improved by 11.0% currency adjusted to € 1,211.0 million (+5.7% reported). This development was based on strong demand in the Running, Training, Sportstyle and Fundamentals categories.
Apparel delivered the highest growth rate among the three product segments. Sales came in at € 966.6 million, representing an increase of 12.0% currency adjusted or 8.6% in Euro terms. All product categories contributed to this success.
Accessories were up 5.4% currency adjusted to € 491.0 million (+3.8% reported). EMEA and Asia/Pacific showed higher sales in this product segment, while the development was negative in the Americas, caused by the United States.
In the nine-month period, PUMA generated own and operated retail sales (including eCommerce) of € 551.1 million. This is equivalent to an increase of 11.9% currency adjusted and represents a share of 20.6% of total sales versus last year’s figure of 20.4%. The sales increase is based on a healthy like-for-like sales growth, a higher number of retail stores in operation as well as a significant momentum of the eCommerce business.
Gross Profit Margin and Operating Expenses:
The gross profit margin of 46.1% represents a slight decrease of 30 basis points compared to 46.4% in the first nine months of 2015. This is solely due to the negative currency impact on our cost of sales from the stronger US-Dollar. The negative currency effect was partly offset by sourcing improvements, selective price adjustments and an improved product mix in the Footwear segment. In Footwear, the gross profit margin was up 70 basis points at 42.8% (last year 42.1%), while in the Apparel and Accessories segment, the margins decreased from 50.4% to 49.1% and from 49.6% to 48.1% respectively.
Operating expenses (OPEX) increased only slightly by 3.4% and amounted to € 1,127.9 million. This is the result of intensified marketing activities for the UEFA Euro 2016 and theOlympic Games in Rio, as well as an extended network of own and operated retail stores. All
other operating functions managed to keep costs stable.
Operating Result and Net Earnings:
The operating result (EBIT) improved significantly by 32.9% and amounted to € 113.5 million. With sales growing faster than operating expenses, PUMA was able to benefit from operating leverage.
Net earnings improved by 61.5% and came in at € 67.0 million (last year: € 41.5 million). This result translates into earnings per share of € 4.48 compared to € 2.77 in 2015.
Working Capital
PUMA’s working capital increased by only 2.8% to € 731.2 million despite higher sales and business volumes as well as the extension of the retail store network. Inventories were up 3.7% at € 715.0 million and trade receivables increased by 3.3% to € 584.1 million,
underpinning a strong performance of working capital management.
Outlook 2016
With PUMA’s positive performance over the first nine months of 2016, we continue to expect a currency adjusted high single-digit increase of net sales, a gross profit margin on previous year’s level (45.5%), and an increase of currency adjusted operating expenses in a mid to high single-digit range for the full-year. In light of the operating result (EBIT) achieved in the first nine months, we now expect the full-year EBIT to be within the upper half of the already communicated range of € 115 million to € 125 million.
Brand and Marketing
In July, we unveiled the first PUMA home and away kits for Mexican football club Chivas, officially called Club Deportivo Guadalajara, one of Mexico’s two biggest clubs.
At the Summer Olympics in Rio, PUMA sprint star Usain Bolt accomplished his “Triple Triple” by winning an Olympic Gold medal in each of the three sprinting events. In total, ten Gold, five Silver and nine Bronze medals were the yield of the PUMA equipped Olympic teams of Jamaica, Bahamas, Cuba and Grenada alongside the Track & Field teams of Switzerland, the Dominican Republic and Barbados.
In September, the first and much-awaited FENTY PUMA by Rihanna collection came into stores worldwide. Later that month, Rihanna presented her Spring/Summer 2017 FENTY PUMA by Rihanna collection at the Paris Fashion Week. This second collection takes
inspiration from 18th century France during the time period of Louis XVI and fuses with a
street style vibe.
In our Women's category, we launched our campaign “DO YOU”, which aims to inspire confidence in women around the world. The campaign is spearheaded by international model, actress, and activist Cara Delevingne who joined PUMA’s growing list of influential
female ambassadors. It features a cross-category product range from PUMA’s Running and Training and Sportstyle collections.
We also announced a new partnership with Abel Tesfaye also known as The Weeknd as a new Global Brand ambassador and creative collaborator. The Grammy-winning artist andstyle icon is the perfect fit to headline PUMA’s latest Sportstyle campaign, ‘Run The Streets’
at the beginning of this month.
In Motorsport, our partnered Formula 1 team MERCEDES AMG PETRONAS won the Constructors’ Championship for the third time in a row. Nico Rosberg is in the pole position to clinch his first world championship crown at the end of the season and is followed by the
rest of PUMA-equipped drivers from Red Bull and Ferrari in the drivers’ standings.
Financial Calendar FY 2017:
February 9, 2017 Financial Results FY 2016
The financial releases and other financial information are available on the Internet at „about.puma.com“.
Media Relations:
Kerstin Neuber - Corporate Communications - PUMA SE - +49 9132 81 2984 - kerstin.neuber@puma.com
Investor Relations:
Johan-Philip Kuhlo – Global Strategy - PUMA SE - +49 9132 81 0 – investor-relations@puma.com
Notes to the editors:
· The financial reports are posted on www.about.puma.com.
· PUMA SE stock symbol:
Reuters: PUMG.DE, Bloomberg: PUM GY,
Börse Frankfurt: ISIN: DE0006969603– WKN: 696960
Notes relating to forward-looking statements:
This document contains forward-looking statements about the Company’s future financial status and strategic initiatives. The forward-looking statements are based on the current expectations and assumptions of the management team. These are subject to a certain level of risk and uncertainty including, but not limited to those described above or in other disclosures, in particular in the chapter Risk and Opportunity Management in the
Group Management Report. In the event that the expectations and the assumptions do not materialize or
unforeseen risks arise, the Company's actual results can differ significantly from expectations. Therefore, we cannot assume responsibility for the correctness of these statements.
PUMA
PUMA is one of the world’s leading Sports Brands, designing, developing, selling and marketing footwear, apparel and accessories. For over 65 years, PUMA has established a history of making fast product designs for the fastest athletes on the planet. PUMA offers performance and sport-inspired lifestyle products in categories such as Football, Running and Training, Golf, and Motorsports. It engages in exciting collaborations with renowned design brands to bring innovative and fast designs to the sports world. The PUMA Group owns the brands PUMA, Cobra Golf and Dobotex. The company distributes its products in more than 120 countries, employs more than 10,000 people worldwide, and is headquartered in Herzogenaurach/Germany. For more information, please visit http://www.puma.com