2015 First Quarter Facts
• Sales up by 4.4% currency-adjusted (+13.2% reported) to € 821 million, growth across all regions and mainly driven by Footwear
• Gross profit margin down, solely due to foreign currency impacts
• OPEX
increase because of marketing expenses, investments in IT, opening of
new retail stores, also strongly impacted by unfavorable currency rates
• EBIT stands at € 38 million
• PUMA IGNITE running shoe technology successfully launched in February
• Outlook adjusted to reflect currency impact
Bjørn Gulden, Chief Executive Officer of PUMA SE: “PUMA´s
first quarter sales grew slightly stronger than expected. This was
mainly caused by a very positive development in footwear. We are working
very hard to improve our product offer, and although we know we have
some ways to go, we feel that this growth in footwear confirms that we
are on the right path.
The negative development in
currencies, had a significant negative impact on our gross profit margin
and operational expenses and therefore also on our EBIT and net
earnings. We do work hard to „counter“ these negative currency effects,
but do currently not have enough leverage to fully neutralize the impact
and have therefore adjusted our outlook for the full year EBIT and net
earnings.
We will continue our strategy to become the
Fastest Sports Brand in the World and will continue to invest in
Product, Marketing, Retail and IT to lay the foundation for solid
profitable growth in the future.”
Sales growth in the first quarter
PUMA’s
first quarter sales performance in 2015 was slightly ahead of our
expectations. Currency-adjusted sales increased by 4.4% to € 821
million. In reported terms, this corresponds to a growth of 13.2%.
Positive sales development in all regions
Sales
in the EMEA region rose by 0.2% currency-adjusted to € 342 million.
Southern European countries developed positively in the first quarter,
while the United Kingdom saw a decline due to a softer Lifestyle
business. The Middle East and Africa regions continued to show a solid
performance in most of the countries and across all categories.
In
the Americas region, sales grew by 5.6% currency-adjusted to € 289
million, with both North America and Latin America developing
positively.
Asia/Pacific sales increased by 10.9%
currency-adjusted to € 191 million with strong performance in China and
India supported by the improved Footwear business.
Footwear leads segment performance in the first quarter
Footwear
sales increased by 7.8% currency-adjusted to € 378 million. This was
driven by a higher demand for PUMA’s Running, Training & Fitness
products, which was partly triggered by the successful launch of the
PUMA IGNITE running shoe in mid-February.
Apparel
sales increased by 5.7% currency-adjusted to € 280 million. A strong
demand for PUMA’s Fundamentals, Running, Training & Fitness and Golf
products underpinned this good performance.
Accessories
sales decreased by 4.6% currency-adjusted to € 163 million. This is
related to lower sales of socks and bodywear in the North American
market.
Satisfying retail performance
PUMA’s
first quarter Retail sales increased by 7.3% on a currency-adjusted
basis to € 144 million, with comparable sales in full-price stores and
outlets slightly up. PUMA also operated a higher number of stores.
Retail sales represented 17.5% of total sales compared to 17.1% last
year.
Negative currency impacts affect gross profit margin
PUMA’s
gross profit margin declined from 48.5% to 46.9% in the first quarter,
solely due to negative currency impacts. The strength of the US Dollar
compared to major “unhedged” and not fully hedged currencies including
Russian Ruble, Mexican Peso, Brazilian Real, Turkish Lira and
Argentinian Peso led to this decrease. The Footwear gross profit margin
declined from 44.1% to 42.9%. Apparel decreased from 53.6% to 50.7%,
and Accessories remained at previous year’s level of 49.6% (Q1 2014:
49.7%). In absolute figures, gross profit increased by 9.3% in reported
terms from € 352 million to € 385 million.
Higher OPEX in line with expectations
As
communicated previously, PUMA continued to invest in the “Forever
Faster” marketing campaign in the first quarter 2015. There was no major
campaign in the first quarter in 2014. In addition, we have started to
invest in our IT infrastructure and we continued with our retail
strategy to open additional retail stores, mainly in emerging markets.
As with the gross profit margin, OPEX was heavily impacted by the
unfavorable currency developments. As a consequence, PUMA’s OPEX
increased by 17.7% to € 351 million. PUMA’s management continues to put a
strong emphasis on strict control of other operating costs. In constant
currencies, the increase in OPEX amounts to 9.5%.
Operating result (EBIT) declines
Despite
the sales growth in the first quarter 2015, the lower gross profit
margin and increased operating expenditures both impacted by negative
currency developments led to a decrease of PUMA’s operating result
(EBIT) from € 59 million to € 38 million. The EBIT ratio decreased from
8.1% to 4.6%.
Financial result improves
The
financial result improved from € -3.2 million to € 0.9 million in the
first quarter. The result turned positive due to currency conversion
impacts.
Net earnings decrease
PUMA’s
consolidated net earnings declined by 30.3% from € 36 million to € 25
million. As a result, earnings per share decreased from € 2.38 to € 1.66
in the first quarter of the year.
Net Assets and Financial Position
Working capital rose in line with sales
Inventories
increased by 23.7% (11.9% currency adjusted) to € 648 million due to
earlier deliveries in order to better service our key strategic
accounts. Trade receivables increased by 17.9% (6.2% currency adjusted)
to € 596 million compared to 31 March 2014, which was driven by higher
sales. Trade payables were similarly affected by currency exchange rates
and increased by 36.7% to € 467 million. As a result, PUMA’s working
capital rose by 10.6% from € 674 million to € 745 million at the end of
March 2015.
Cashflow / Capex
The
free cashflow before acquisitions declined to € -233 million mainly due
to lower cashflows from operating activities as a result of the
increased working capital.
Capex increased from €
12 million to € 16 million, which was mainly invested in the opening of
selected retail stores as well as IT equipment.
Stable cash position
PUMA’s
cash and cash equivalents position at € 295 million as of 31 March 2015
remained broadly stable at last year’s level of € 301 million.
Brand and Product Update
Following
the launch of our latest running innovation PUMA IGNITE by the World’s
Fastest Man Usain Bolt on New York City’s Times Square, the sell-through
of this innovative footwear technology has been off to a good start
both in retail and wholesale. The innovative IGNITE foam technology
offers the highest energy return in the industry and strongly represents
our new “Forever Faster” positioning.
In order
to further strengthen our dominant position in Motorsport, we recently
announced a new long-term Formula 1 partnership with INFINITI RED BULL
RACING. Effective 1 January 2016, we will be the official, licensed
supplier of team and race wear. In addition, we will exclusively produce
and distribute INFINITI RED BULL RACING licensed replica, fanwear and
lifestyle collections for global distribution. We will also prominently
feature INFINITI RED BULL RACING in our brand and motorsport marketing
campaigns in 2016 and beyond.
Our partnership
with Red Bull will span beyond Formula 1 racing. We have also signed a
new multi-year partnership with the “Wings for Life World Run”, which
was co-founded by Red Bull founder Dietrich Mateschitz to fund
scientific research for spinal cord injuries. This will serve as a
platform to promote our IGNITE running and CELL apparel technology. As
the exclusive official sportswear partner, event staff and athletes
participating in the Wings for Life World Run sported PUMA footwear,
apparel and accessories. 100% of all starting fees and donations will go
directly to spinal cord research.
Our Teamsport
category saw the extension of one of PUMA’s longest-standing and most
successful partnerships in Football: through our new long-term contract
with the Italian Football Federation (FIGC), PUMA has increased its
marketing rights as well as retained the exclusive Master License to
actively manage the entire global licensing portfolio of the Federation.
PUMA, who first became partner of “Gli Azzurri” in 2003, will also
continue as the official technical supplier to all associated FIGC
teams.
In March, PUMA won the “2014 Marketing
Leader Award” from Foot Locker Europe. The award has recognized PUMA’s
“Forever Faster” marketing campaign, which was launched in Autumn/Winter
2014 and the growth of brand awareness through the effective use of
advertising, public relations and event marketing. This underlines the
impact of our “Forever Faster” campaign and the close collaboration with
our retail partners.
Strategy Update
We
have made further progress towards becoming the Fastest Sports Brand in
the World. We have launched successful products for this year’s Spring
Summer season, including our new IGNITE running technology. Over the
coming seasons we will continue to develop the IGNITE platform with
innovations, material updates and product launches supported by
dedicated media activities.
We have said that we
would enhance our product communication, telling better and simpler
stories to the consumers and utilize our assets. This promise is
reflected in our ongoing marketing campaign “Forever Faster”. The
current theme is more product-focused and features Usain Bolt running in
the IGNITE as well as star-footballers including Mario Balotelli and
Cesc Fàbregas in action with our latest football boot innovation
evoPOWER.
Our new multi-year partnership with
Rihanna has already generated a lot of positive PR and social media
buzz. Rihanna is an ideal brand ambassador, thanks to both her
personality and iconic style. She is currently featured in an in-store
marketing campaign promoting PUMA’s key training styles of the season.
In August, Rihanna will also play a key role in the brand campaign
Forever Faster, featured along PUMA’s world-class athletes such as Usain
Bolt and Sergio Aguero. Later she will be the Creative Director for her
own line of training & lifestyle products.
In
terms of improving the quality of our distribution, our sales
organizations are working hard to intensify our relationships with key
strategic accounts as well as building new partnerships with strong
retailers in both established and emerging markets. Amongst others we
have continued our collaboration with Foot Locker and opened the first
European PUMA Lab at the Foot Locker store in Milan in February. We have
also added new locations to their US portfolio in Philadelphia and
Atlanta.
As for PUMA’s own retail, we have
developed a new instore concept which will ensure that our PUMA stores
better tell our product stories, reveal the technologies behind them and
strengthen PUMA’s positioning as a sports brand. Last month, we started
the global roll-out with our PUMA store in Herzogenaurach. It will
continue to be implemented in our stores world-wide, with the shops in
Hong Kong and Mexico City being next in line. Continuing our efforts to
improve and expand our online presence, we have expanded the selection
of our eCommerce website to include our more exclusive PUMA Select
products as of May.
We continue to work on
simplifying our organizational structure and setup. In Indonesia we have
transitioned from a distributor to a new subsidiary which will improve
our presence in this important market. In terms of our IT enhancement,
we continue to work on our focus areas including standardized ERP
systems, overall IT infrastructure and also tools to enable more
efficient design and planning processes. These investments are essential
in order to achieve our vision of becoming the Fastest Sports Brand in
the World. We will continue to drive our growth strategy forward with
better, and faster collections, continued investments into our brand,
our organization, our distribution and our IT infrastructure.
Outlook for the Financial Year 2015
In
2015, PUMA will continue its strong marketing investments to further
enhance and reinforce our brand positioning, making a further step in
getting PUMA back on a path of more profitable and sustainable growth.
After
the positive sales development in the first quarter 2015, we continue
to expect an increase in the medium single-digit range for full-year
currency-adjusted net sales.
However, as already
indicated in the outlook for 2015 at the beginning of this year, the
continued adverse developments of foreign exchange rates during the
recent months, particularly the strengthening of the US Dollar versus
nearly all other currencies, had a significant negative impact on PUMA’s
reported gross profit margin. PUMA has already taken and will continue
to take countermeasures, but the impact will not fully offset the
negative currency impact on the gross profit margin. As a consequence,
we now foresee a drop in the gross profit margin for the full year in a
range of 100 to 150 basis points versus last year (2014: 46.6%).
As
announced at the beginning of this year, we will continue to invest
strongly in marketing, in the upgrade of PUMA’s current IT
infrastructure and the extension of our own retail store network. This
will result in an increase in OPEX, that will be further exacerbated by
negative currency impacts. At the same time, PUMA’s management will
continue to put a strong emphasis on strict control of other operating
costs.
As a consequence of the now expected drop
in gross profit margin and adverse currency effects on OPEX, we now
expect EBIT for the full year to come in at a range between € 80 million
and € 100 million. Net earnings will be impacted accordingly.
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 3170 – investor-relations@PUMA.com
Notes to the editors:
• This press release and financial reports are posted on www.about.PUMA.com.
• PUMA SE stock symbol:
Reuters: PUMG.DE, Bloomberg: PUM GY,
Börse Frankfurt: ISIN: DE0006969603– WKN: 6969603
Notes relating to forward-looking statements:
This
document contains forward-looking information about the Company’s
financial status and strategic initiatives. Such information is subject
to a certain level of risk and uncertainty that could cause the
Company's actual results to differ significantly from the information
discussed in this document. The forward-looking information is based on
the current expectations and prognosis of the management team.
Therefore, this document is further subject to the risk that such
expectations or prognosis, or the premise of such underlying
expectations or prognosis, become erroneous. Circumstances that could
alter the Company's actual results and procure such results to differ
significantly from those contained in forward-looking statements made by
or on behalf of the Company include, but are not limited to those
discussed be above.
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, Training and Fitness, Golf, and Motorsports. It engages in
exciting collaborations with renowned design brands such as Alexander
McQueen and Mihara Yasuhiro to bring innovative and fast designs to the
sports world. The PUMA Group owns the brands PUMA, Cobra Golf, Tretorn,
Dobotex and Brandon. 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
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