Ecommerce drove a recovery in sales and profitability at Puma in the third quarter of its financial year, as its stores reopened from lockdown, sports events resumed and consumer confidence improved. Online sales grew by 60.9% during the quarter, contributing to growth of 66.5% in the first nine months of the year. However, the sportswear retail brand remains cautious as Covid-19 lockdowns continue around the world.
The retail brand, ranked Top350 in RXUK Top500 research, said that while it opened 2020 with a strong order book and strong sales across its channels in early January, its Chinese market shut down in the last week of that month and its entire business in the region “basically disappeared” – except for ecommerce. Covid-19 spread worldwide from mid-March – by the end of that month about 80% of its own stores were closed, as were those of its retail customers, and sales in April alone were down by 55% on the same time last year.
Sales improved as stores reopened from May – and by the end of June, 85% of Puma’s own shops were open. The number of people visiting shops remained lower than last year, but those who did visit were more likely to spend. At the same time, the sports brand’s ecommerce business continued to grow strongly.
Sales grew to €1.6bn (£1.4bn) in the third quarter, a rise of 13.3% compared to the same time last year – following a second quarter in which sales fell by almost a third (30.7%). Wholesale remains the largest part of the brand’s sales and increased by 12.3% to €1.2bn. Its direct-to-consumer business, which includes ecommerce and its own stores, turned over €389.9m (£346.80m), 16.7% up on the same time last year, largely as ecommerce sales grew by 60.9% in the third quarter alone. Sales grew in the Americas (+20.7%) and in EMEA (+17.7%), while sales in Asia Pacific fell by 1.9% as growth slowed in China, and sales fell in India, Korea and South East Asia. Earnings before interest and tax (EBIT) grew by 16.8% from €189.5m (£168.45m) last year.
In the first nine months of the year so far, Puma sales of $3.7bn (£3.3bn) fell by 5.1% across all markets. Wholesale revenue fell by 6.8% to €2.8bn while its direct-to-consumer business took 24.8% of sales during the period and grew by 0.4% to €922.5m (£821.58m). Ecommerce alone grew by 66.5%, thanks, said Puma, to a shift into performance marketing and promotions. EBIT fell to €145.9m (£129.68m) from €385m (£342.35m) last time.
Bjørn Gulden, chief executive of Puma SE, said: “The third quarter developed much better than I expected. Retail stores reopened, sports events resumed, consumer confidence improved and our sales increased week by week. I feel this strong performance confirms the strength of both Puma as a brand and the sporting goods industry in general.
“Despite a very promotional market environment and currency developments that put pressure on our margins, we were even able to improve our EBIT compared to last year. This was achieved by continued strong cost control that we initiated in the extremely weak second quarter and through less but more efficient marketing activities.
“October started well, but the recent development of Covid-19 and the number of infections we are seeing globally make us cautious for the rest of year.”
The brand, which is based in Germany, said it could not make reliable predictions for the rest of the year owing to that continued uncertainty.
Commenting on the figures, Gemma Boothroyd, retail analyst at data and analytics business GlobalData, said Puma had benefited from the demand for sportswear during lockdown. She said that there were already rumours of cancellations of sporting events such as the NBA 2021 All-Star Game as infection rates rise, and said: “Should stores be forced to close, it will be critical that PUMA continues to highlight its ecommerce channel, which boasted 60.9% sales growth throughout Q3 FY2019/20. Emphasising promotions to appeal to price-conscious consumers will be key, and it should also curate online-exclusive lines to drive spend through the channel.”
She also said that apparel (3.8%) had been Puma’s weakest category in the third quarter, behind accessories (+18.6%) and footwear (+6.1%).”An over-reliance on footwear threatens to hit the brand considerably hard in Q4, with looming lockdowns and potential limits on sporting opportunities, so it is vital that Puma places greater emphasis on its apparel offer,” she said. “It should promote versatile, multifunctional clothing styles and feature these in greater abundance on its social media channels, which are currently dominated by footwear content.”