Puma has seen its profits fall by nearly 62 % in the first quarter, while its revenue only fell by 1.3 %. E-commerce managed to save part of the sports brand's performance, but it looks like worse is yet to come.
The worst is yet to come
"The first quarter was difficult, but we feel we did a decent job. The second quarter will financially be even worse with more than 50 % of global sports and sport lifestyle space being closed", CEO Bjorn Gulden told MarketWatch. In the first quarter, net profit fell by 62 % to 36.2 million euros and earnings before interest and taxes halved from 142.5 million euros to 71.2 million euros - way under analysts' forecasts of 75 million euros.
Turnover came as a positive surprise to analysts: they were expecting 1.26 billion euros, but Puma ended up with 1.30 billion euros in sales. This represents a 1.3 % decline, despite growth in the first ten weeks of the quarter. Footwear was the only product division to post growth in the quarter (+ 1.9 %), while sales of apparel and accessories fell by 6.3 % and 0.2 % respectively.
Three phases of recovery
E-commerce has jumped by a whopping 40 %, causing Puma to focus on online sales as well as on markets where stores and factories can reopen. The sports brand says it is working with logistics partners "to minimize the damage, assure timely deliveries, avoid excess stock as much as possible and to find fair solutions for all of us". In May, the company also obtained a new credit facility worth 900 million euros.
The plan? "Survive, recover, grow again", Footwear News quoted Puma's CEO. Each market is currently at a different stage: Asia/Pacific is still in the recovery phase, while the EMEA region (Europe, Middle East, Africa) is "moving towards a recovery" and the Americas are currently in the middle of the survival phase.