Forecast raised: Puma is about to jump again

Forecast raised
Puma starts to jump again

The sporting goods manufacturer Puma is back on track despite the corona pandemic. However, there are significant problems with delivery from Asia and North America. There is simply not enough capacity. On top of that, companies in China are confronted with political problems.

Closed shops in Europe, a lack of freight containers or buyers’ strike in China: Puma is taking it all away. After a surprisingly good start to the year, the world’s third largest sporting goods manufacturer has significantly raised its sales expectations for 2021. After a currency-adjusted increase of more than a quarter to 1.55 billion euros in the first three months, CEO Björn Gulden now expects sales to increase by around 15 percent. So far he had only committed himself to moderate growth.

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Because of the uncertainties surrounding the corona pandemic, Puma is sticking to the vague goal of increasing profits “significantly” after the slump last year. “It’s not going smoothly. We are not working very efficiently,” he said. The ups and downs in the Corona crisis have messed up freight traffic on the high seas. In Asia there is a lack of containers in which shoes and jerseys are transported to Europe and America. The ports – especially in North America – are overloaded and ships are stowed there. Ship deliveries were delayed on average by two to three weeks. Freight costs have doubled for Puma, said the CEO. And that will stay that way until spring 2022 because of the long-term contracts.

Nevertheless, earnings before interest and taxes (EBIT) more than doubled to 154 million euros in the first quarter, and net profit even tripled to 109 million euros. Analysts expect similar growth rates for 2021.

Gulden admitted that Puma has also been affected by the protests against Western brands in China since the end of March. For a month there has been less going on in the Puma stores. He spoke of “tensions” between the US, Europe and China. A boycott of foreign brands was called on social media in China after the US and EU adopted sanctions for dealing with the Uyghur minority in western Xinjiang Province. Many clothing manufacturers buy cotton from there. “I hope that will go away again,” said Gulden.

China is the fastest growing sporting goods market in the world. In the first quarter, however, America grew faster than Asia (28.8 percent) at 38.5 percent after adjusting for currency effects. Although 30 percent of Puma dealers in Europe are currently still closed due to the corona pandemic, sales in the region increased by 14 percent. The shop closings have alleviated the supply problems somewhat, said Gulden. Online sales soared 75 percent worldwide.

The Puma boss expects an additional boost from the postponed European football championship in June and July, at which four national teams will appear in Puma jerseys, and from the Summer Olympics in Tokyo.

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