HERZOGENAURACH: Shares and currencies across Asia slumped on Monday as the number of coronavirus infections rose sharply in South Korea, Italy and Iran, sending investors scurrying to safe havens such as gold.
Among the major sports facing brands recalibrating forecasts for 2020 is German sportswear major PUMA, which reported record sales figures for 2019 across all markets, but more so from the Asia Pacific, driven in large measure by China and China.
In an earnings statement released late last week, PUMA reported that sales increased by 18.4% reported in the financial year 2019 (+16.7% currency adjusted). All regions and product divisions contributed with double-digit growth.
The Asia/Pacific region delivered the strongest sales growth of 26.0% reported to €1.5569 billion. This corresponds to a currency adjusted increase of 22.8%. Growth in the region was mainly driven by China and India.
In the EMEA region, sales rose by 11.2% reported to €2.0014 billion (+11.2% currency adjusted). As a result, the EMEA region exceeded the two billion Euro sales mark for the first time. The main growth drivers were Germany, Spain, Russia, and Turkey.
In the Americas region, sales increased by 20.6% reported to € 1.944 billion. Currency adjusted sales increased by 17.9%. Both North America and Latin America contributed with double-digit growth rates. Currency exchange effects for North America were positive, while especially the weakness of the Argentinian Peso led to a negative currency effect on sales for Latin America.
Bjørn Gulden, chief executive officer of PUMA, noted: “2019 ended with a very strong fourth quarter for us with revenues being up 20.6% reported (18.3% currency adjusted) and EBIT up 47%. All regions and all product divisions were up by double digits. This made 2019 the best year in PUMA‘s history with a revenue of € 5.5 billion (+ 18.4%) and an EBIT of € 440 million (+30%).
“I am very proud of what the team has achieved and think this performance shows the global potential of the PUMA brand.
“After a good start into 2020, February has of course been negatively affected by the outbreak of COVID-19. The business in China is currently heavily impacted due to the restrictions and safety measures implemented by the authorities. Business in other markets, especially in Asia, is suffering from lower numbers of Chinese tourists.
“Given the current uncertainty around the virus it is of course impossible to forecast its impact on the business. We will do everything we can in the short term to minimize the damage and remain very positive in the long term both for our industry and for PUMA.”
Referring specifically to India, Gulden stated: “It’s great to see the brand record sustained growth in India. It is a strategic market for Puma.
“A combination of global strength and local execution has accelerated the brand’s momentum in the country.”
The India unit reported revenue of Rs 14.13 billion in calendar year 2019, while like-to-like store sales grew 17%, the latest regulatory filings accessed by Economic Times show. Puma operates 365 owned stores in India.
Abhishek Ganguly, managing director, PUMA India commented: “There’s a lot of traction on sportswear now with women, younger consumers and sportswear becoming a lifestyle statement.”
The German sportswear brand boasts Virat Kohli, Team India cricket captain and arguably the country’s biggest celebrity endorser, as its lead brand ambassador in the Indian market.
PUMA OUTLOOK 2020
The corona virus has negatively impacted business since the beginning of February. This is especially true in China where more than half of both own and operated and partner stores are temporarily closed due to restrictions of the local authorities. Business is further impacted in other markets, especially in Asia, due to decline of Chinese tourism business. PUMA expects this also to have a negative impact on total sales and EBIT for the first quarter 2020.
The uncertainty regarding the duration of the COVID-19 outbreak and the total impact it could have makes it difficult to forecast the business, but PUMA is currently working under the (overly optimistic SportzPower believes) assumption that the situation will normalize in the short term and that it then will be able to achieve full year targets.
As for the targets, for the full year 2020, PUMA expects EBIT for the financial year 2020 in a range between €500 million and €520 million (2019: €440.2 million). The company also expects a significant improvement of net earnings in 2020.
