DGAP-News: PUMA SE / Key word(s): Annual Results/Quarter Results
PRESS RELEASE Q4 AND FULL YEAR 2020
PUMA achieves Sales and Profitability growth in the fourth quarter despite COVID-19 related lockdown measures
Herzogenaurach, February 24, 2021
2020 Fourth Quarter Facts
- Sales increase by 9.1% currency adjusted (ca) to € 1,520 million (+2.8% reported)
- Gross profit margin improves to 48.0% (last year: 47.3%) mainly due to better sell-through, less promotional activity and good inventory management
- Operating expenses (OPEX) increase by 2.8% due to higher sales-related, warehousing and distribution costs
- Operating result (EBIT) improves by 14.6% to € 63 million (last year: € 55 million)
- In Formula 1, PUMA athlete Lewis Hamilton wins seventh World Champion title
- Global pop superstar Dua Lipa joins the PUMA family and will be the newest brand ambassador for PUMA's women's business
- PUMA launches a new line of performance running shoes featuring its proprietary NITRO foam
- PUMA and Neymar Jr. successfully launch the football boot FUTURE Z 1.1
- PUMA partners with Nintendo for a Super Mario collection
- Sales decrease by 1.4% (ca) to € 5,234 million (-4.9% reported) due to a negative COVID-19 impact, especially in the very weak second quarter
- Gross profit margin declines to 47.0% (last year: 48.8%), mainly caused by negative currency impacts and more promotional activity, partially offset by positive distribution channel and regional mix effects
- Operating expenses (OPEX) decrease by 0.3% to € 2,265 million due to cost saving measures initiated at the end of the first and during the second quarter
- Operating result (EBIT) at a profit of € 209 million (last year: € 440 million)
- Net earnings amount to € 78.9 million (last year: € 262.4 million) and earnings per share at € 0.53 (last year: € 1.76)
- A dividend of € 0.16 per share for 2020 to be proposed at the Annual General Meeting
- In May 2020, PUMA announces sustainability targets 10FOR25, underlining its long term sustainability ambitions until 2025
Bjørn Gulden, Chief Executive Officer of PUMA SE:
Fourth Quarter 2020
The gross profit margin improved in the fourth quarter by 70 basis points to 48.0% despite negative currency effects. The improvement in gross profit margin was driven by better sell-through, less promotional activity and good inventory management as well as favourable distribution channel and regional mix effects.
Operating expenses (OPEX) in the quarter increased by 2.8% to € 668.5 million due to higher sales-related, warehousing and distribution costs mainly driven by strong increase in e-commerce business, while we continued our overall tight cost control.
The operating result (EBIT) in the fourth quarter increased by 14.6% to € 63.3 million (last year: € 55.2 million) due to sales growth combined with a higher gross profit margin. This resulted in an improved EBIT margin of 4.2% in the fourth quarter of 2020 (last year: 3.7%).
Full Year 2020
The Wholesale business in the financial year 2020 decreased by 4.0% (ca) to
PUMA's gross profit margin declined by 180 basis points from 48.8% to 47.0% in the financial year 2020. The main drivers were negative currency impacts and a very promotional environment during parts of the year due to the impact of COVID-19. Distribution channel and regional mix effects had a slight positive effect on the gross profit margin. In Footwear, gross profit margin declined from 46.4% in 2019 to 45.7% in 2020, in Apparel from 51.1% to 48.5% and in Accessories from 50.5% to 47.0% respectively.
The operating result (EBIT) decreased from € 440.2 million in 2019 to € 209.2 million in 2020 due to the significant negative impact of the COVID-19 pandemic mainly in the first half of 2020.
The financial result decreased from € -22.6 million last year to € -46.8 million in 2020. This development is mainly due to losses from currency conversion in 2020 compared to gains from currency conversion in 2019. In addition, the net interest expense increased from € 32.8 million in 2019 to € 42.9 million in 2020 mainly caused by higher expenses related to cash flow hedging.
In the financial year 2020, PUMA generated a profit before tax of € 162.3 million (last year: € 417.6 million). Tax expenses were € 39.2 million compared to € 108.6 million last year and the tax rate decreased from 26.0% to 24.2% in 2020.
As a consequence, net earnings declined to € 78.9 million (last year: € 262.4 million). This translated into earnings per share of € 0.53 compared to € 1.76 in 2019.
Proposal of a Dividend of € 0.16 per share
Brand and Strategy Update
Therefore, we focused on our six existing strategic priorities: create brand heat, design, develop and produce market-leading product ranges that are right for our consumers, build a comprehensive offer for women, improve the quality of our distribution, increase the speed and efficiency of our organizational infrastructure and strengthen our positioning in the North American market by leveraging our re-entry into the Basketball category. In 2020, we added two further strategic priorities: an even stronger focus on local relevance and increased communication around our long-standing activities in the area of sustainability.
To ensure continued brand heat and momentum in 2020, we invested in strong product ranges for the upcoming seasons and several new athletes, teams and brand ambassadors.
A major highlight within our Teamsport category was the new long-term partnership with football star Neymar Jr., one of the most successful and influential players of his generation. Neymar Jr. has won several trophies in Brazil, Spain and France as well as the Champions League(TM) and the Copa Libertadores(TM). He also won the Olympic Gold Medal with the Brazilian National Team in 2016. He has scored 64 goals in 103 matches for Brazil, making him the second best goal scorer in the history of the Brazilian national team just behind another legendary PUMA player: Pelé. The addition of Neymar Jr. to our roster of world-class assets underlines our continued focus on the football category. Neymar Jr. played his first match in the PUMA KING football boot, which was also worn by PUMA football legends Pelé, Cruyff and Maradona. Neymar Jr. now plays in the newly launched PUMA FUTURE Z 1.1 football boot, which will be also worn by PUMA players James Maddison, Marco Reus and Dzsenifer Marozsán. PUMA continued to grow its portfolio of world-class football teams by signing Dutch club PSV Eindhoven, Ukrainian club Shakhtar Donetsk as well as the national federations of Iceland and Paraguay. In 2020, we also launched the revolutionary PUMA ULTRA football boot, which is worn on-pitch by players like Antoine Griezmann, Sergio Agüero, Harry Maguire and Eugénie Le Sommer and received great feedback from retailers and consumers.
Our Running and Training category benefited from the extraordinary performance of our track and field athletes and the introduction of innovative products.
2020 was also a successful year for PUMA's Golf business which continued to be an important pillar among our performance categories. Especially our innovative COBRA Golf SPEEDZONE drivers and the one length irons enjoyed great popularity throughout the year. Supported by his COBRA Golf equipment, PUMA player Bryson DeChambeau won the U.S. Open.
In Motorsport, PUMA brand ambassador Lewis Hamilton became Formula 1 World Champion for the seventh time, equaling Michael Schumacher's existing record. Among launches of limited SPEEDCAT editions in 2020, PUMA introduced a dedicated women's collection with the launch of the Mercedes-AMG Petronas F1 Team SPEEDCAT Mid L. The shoe is a great and stylish example of PUMA's ambition to support gender equality in motorsport.
Creating a leading product offer for women remains a priority for PUMA and we continue our mission to be the most fashion-forward sports brand for the female consumer. In 2020, we evolved our positioning of "PUMA owns the space where the gym meets the runway", as more and more women take up sports worldwide and athletic wear has long made its way into everyday outfits. We welcomed English singer and songwriter Dua Lipa as our newest women's brand ambassador, who will appear in important campaigns for the brand in the new year. Canadian model Winnie Harlow joined the PUMA family in early 2020, and already featured in the marketing campaigns for several new footwear styles, including the KYRON and the MILE RIDER. Our existing key footwear franchises such as the PUMA CALI continued to resonate well with the female consumer and showed strong sell-through.
Our return to Basketball was an important step towards increasing our credibility as a sports brand in North America. With the support of JAY-Z, our creative director for Basketball, we continued to develop a strong product offering across Footwear, Apparel and Accessories that resonated well on and off the court. We also signed a multi-year partnership with Grammy-winning artist J. Cole, with whom we developed and launched the basketball shoe RS-DREAMER that sold out immediately. Later in the year, we announced a new partnership with creative director June Ambrose, who will create girls and women's collections for PUMA Basketball as of 2021. We continued to work with highly talented NBA players and gained great on-court visibility when PUMA players Kyle Kuzma and Danny Green won this year's NBA Championship with the Los Angeles Lakers. Signing a long-term partnership with LaMelo Ball, one of the top picks of the 2020 NBA draft, further underlines our commitment to the sport. Our Basketball business is also growing beyond the key North American market, with strong sales of our performance basketball product portfolio and basketball-inspired Sportstyle product families such as the RALPH SAMPSON.
While Basketball is especially important for North America, we also focused on ensuring strong local relevance in all our other markets around the world. As the PUMA brand and products continue to resonate well around the world, we see an increased need to focus on the sports, ambassadors, influencers, collaboration partners and communication platforms that are most relevant in the different markets. A good example is India, where we have a market-leading position in part due to our strong presence in the nation's most popular sport, cricket, and our long-term partnership with Virat Kohli, the captain of the Indian national cricket team.
PUMA continued to improve the quality of distribution by expanding its presence in key sports performance and sportstyle accounts around the world. We were able to strengthen the relationships with our retailers by being a flexible and service-oriented business partner also throughout the COVID-19 pandemic. In parallel, we invested in our direct-to-consumer business, which includes our owned-and-operated retail stores as well as our e-commerce business. During 2020, we saw strong growth in our e-commerce business and invested in our respective front-end and back-end capabilities as well as performance marketing to drive traffic and conversion.
In sourcing, we worked very closely with all our suppliers throughout 2020 and supported each other wherever possible to mitigate the negative consequences of the COVID-19 pandemic. The strong partnership with our suppliers has helped us tremendously in a challenging environment and contributed to a very resilient supply chain situation in 2020. It also enabled us to avoid nearly any disruptions in the delivery of products to our retail partners and consumers around the world. We cancelled very few (less than 1%) orders and we paid our suppliers the costs for those orders we cancelled. The long-term collaboration with our suppliers proved to be indispensable in 2020 and will continue to be a key component of our strategy.
On the operational side, we made good progress with the upgrade of our logistics network in order to support our overall growth ambitions. In 2020, we opened our new highly automated multi-channel distribution center in Indianapolis, USA, which will speed up delivery times in the US. In Europe, we continued to work on our multi-channel distribution center in Geiselwind, Germany, which is expected to be operational in the second quarter of 2021. In addition, we worked on multiple other distribution center projects around the world.
While social, economic and environmental sustainability has always been a core value for PUMA, we wanted to place an even higher strategic emphasis on this topic with a special focus on increasing the number of sustainable products in our ranges and stronger consumer-facing communication. In 2020, we officially announced our 10FOR25 targets which outline our ambitious sustainability-related objectives until 2025 and are linked to the United Nation's Sustainable Development Goals. We also launched our FOREVER BETTER communication platform, which we will use to communicate our sustainability programs to consumers. In 2020, we presented two collections with a sustainability focus, which received strong feedback from our retailers and end consumers: PUMA x FIRST MILE and PUMA x CENTRAL SAINT MARTINS.
However, as the number of COVID-19 cases continues to be on a very high level globally, several governments have already extended their lockdowns until end of February or even into March. As of today, approximately 50% of the retail stores selling our products in Europe are still closed due to various lockdown measures. Also in multiple other markets the retail stores remain closed or are operating with significant restrictions. By consequence, a part of our business in 2021 will be once again negatively impacted by the COVID-19 pandemic despite a strong orderbook and high demand from our retail partners and consumers.
We will continue to mitigate the consequences of the COVID-19 pandemic wherever possible but foresee a negative impact on our business especially in the first half of 2021. We currently believe that the first quarter and also the beginning of the second quarter will be heavily impacted. However, we believe that we will see a recovery until the end of the second quarter and strong improvements throughout the third and fourth quarter. Given that vaccination campaigns are already under way in almost all parts of the world, we remain confident especially for the second half of 2021. For the full year 2021 we therefore expect at least a moderate increase in sales in constant currency - with an upside potential - (2020: € 5,234.4 million) and both, our operating result (EBIT 2020: € 209.2 million) and net earnings (2020: € 78.9 million) will show a significant improvement compared to 2020. The development of our gross profit margin and our OPEX-ratio for 2021 will depend on the degree and duration of the negative impact of the COVID-19 pandemic on our sales.
April 28, 2021 Quarterly Statement Q1 2021
May 5, 2021 Annual General Meeting
July 29, 2021 Interim Report Q2 2021
October 27, 2021 Quarterly Statement Q3 2021
The financial releases and other financial information are available on the Internet at "about.puma.com".
Notes to the editors:
- The financial reports are posted on about.puma.com.
- PUMA SE stock symbol:
Reuters: PUMG.DE, Bloomberg: PUM GY,
Notes relating to forward-looking statements:
PUMA is one of the world's leading Sports Brands, designing, developing, selling and marketing footwear, apparel and accessories. For 70 years, PUMA has relentlessly pushed sport and culture forward by creating fast products for the world's fastest athletes. PUMA offers performance and sport-inspired lifestyle products in categories such as Football, Running and Training, Basketball, Golf, and Motorsports. It collaborates with renowned designers and brands to bring sport influences into street culture and fashion. The PUMA Group owns the brands PUMA, Cobra Golf and stichd. The company distributes its products in more than 120 countries, employs more than 13,000 people worldwide, and is headquartered in Herzogenaurach/Germany.
24.02.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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