Pandemic "unfortunately still present: Puma is sneaking around a forecast

Pandemic "unfortunately still present
Puma sneaks around a forecast

Corona hit the sporting goods manufacturer Puma hard, like so many others. In the meantime, however, orders from wholesalers are coming in. But the company doesn't quite trust it yet. Especially since it is currently difficult to get the goods from Asia into the shops – containers are scarce.

The Franconian sporting goods manufacturer Puma is only cautiously approaching a higher rate of growth in view of the ongoing corona crisis. "The uncertainty is there," said Puma boss Björn Gulden. Therefore, forecasts are difficult. "No matter what I say, it's wrong." Although wholesale orders are booming for 2021, Puma only predicts moderate sales growth. "That can be five, eight or ten percent," said Gulden. The pandemic is "unfortunately still present" and will affect business well into the second quarter. The earnings before interest and taxes (EBIT), which fell by more than half due to the ups and downs of the Corona year, should recover significantly.

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But the number three on the world sporting goods market is struggling with new hurdles: According to Gulden, the freight rates for the transport of shoes and textiles from Asia have recently increased "unbelievably" because the containers are scarce. That puts pressure on margins, which are already under pressure from higher inventories. As a result, sales were left behind in the United States, where most of the sports stores are open. In Europe, where half of the shops are still closed to protect against infection, the next few weeks would be bumpy, said the Puma boss. "But I'm a lot more optimistic now than I was in April or May of last year. We have vaccines and it's getting warmer, which helps."

The fact that Puma remains so vague is not surprising, wrote Jefferies analyst James Grzinic. "But that sounds softer than we expected." Even in 2021, Puma will not end up where it originally wanted to be in 2020.

The slump in sales in the spring of 2020 in the first Corona wave had brought Puma – like its competitor Adidas – into liquidity problems. A 900 million euro credit line from the state bank KfW ultimately did not have to be touched. In the meantime, the loan has been canceled and the amount refinanced in some other way, said Gulden. This means that Puma can also pay a dividend for 2021. The plan is 16 cents per share, "if we have reasonably normal conditions before the annual general meeting," he said. That is a third of the 50 cents that Puma actually wanted to pay out for 2019, but which had to be canceled because of the state aid loan.

"2020 was definitely the most difficult year I've ever experienced," said Gulden. After adjusting for currency effects, sales only fell by 1.4 percent to 5.23 billion euros, because Puma caught up with the slump in summer and autumn. However, the pandemic showed a need to catch up in online retail. E-commerce sales increased by 63 percent, but Puma does not want its own smartphone app to be operational until the end of the current year. The EBIT fell to 209 (2019: 440) million euros, the net profit even collapsed by 70 percent to 79 million euros.

. (tagsToTranslate) Economy (t) Puma (t) MDax company (t) Sports goods industry (t) Quarterly figures (t) Corona crisis