Puma stood by its full-year outlook on Tuesday and reported a stronger than anticipated third-quarter revenue margin, reassuring buyers and boosting its shares after a stronger euro dented the German sportswear model’s quarterly earnings.
Shares within the firm gained 4 p.c in early buying and selling. The inventory dropped 10 p.c in a day earlier this month after analysts stated the sportswear firm’s third-quarter earnings may miss market expectations as a result of forex affect.
“Forward of the outcomes there was a number of warning particularly on the highest line and on margin, however issues have been a bit higher than anticipated,” stated Damien Lanternier, portfolio supervisor at DNCA in Paris, who holds shares in Puma.
Puma’s working revenue was €236.3 million ($252.3 million) for the quarter, down from €257.7 million a 12 months earlier, however income beat analysts’ expectations with 6 p.c progress in currency-adjusted phrases, coming in at €2.31 billion.
Gross margin additionally got here in stronger than anticipated, at 47.1 p.c, up from 46.8 p.c a 12 months in the past. Analysts had anticipated gross margin to fall.
Puma confirmed its goal for annual working revenue between €590 million and €670 million, saying it anticipated “sturdy enchancment in profitability” within the fourth quarter helped by decrease advertising, sourcing and freight prices, regardless of a dark backdrop for shopper demand.
“We keep, let’s say, very conservative and really cautious as a result of we simply see too many transferring elements presently on this planet,” CEO Arne Freundt advised reporters on a name.
Foreign money results had a detrimental affect on gross sales in euro phrases, Puma stated. The euro was a lot stronger over the third quarter in comparison with the identical interval final 12 months, impacting the interpretation of greenback gross sales into Puma’s house forex.
A$AP Rocky Signing
In currency-adjusted phrases, the EMEA area was the strongest for Puma with 9.9 p.c progress within the third quarter, whereas gross sales in Asia-Pacific grew by 4.6 p.c and gross sales within the Americas gained simply 2.5 p.c.
“The one largest concern for Puma is that within the massive markets, just like the US and China, its model notion shouldn’t be as sturdy,” stated Deutsche Financial institution analyst Adam Cochrane.
In the US, Puma is making an attempt to position extra of its merchandise in higher-end shops, stated Cochrane.
Puma can also be utilizing movie star partnerships to raise its model in the US, saying American rapper A$AP Rocky as artistic director for its Method 1 partnership, because the sporting world turns into extra enmeshed with music and tradition.
“Superstar partnerships have all the time been a part of Puma’s DNA, they usually have completed it fairly properly, however this additionally exhibits the precise energy of Puma in motorsport, the place they’re clearly primary and it’s a rising class,” stated Lanternier.
As retailers attempt to get well from overstocking that has led to discounting in the US, Puma stated its inventories fell by 20.3 p.c in comparison with their stage on Sept. 30 final 12 months.
By Linda Pasquini, Ozan Ergenay and Helen Reid; Editors: Kirsten Donovan, Shri Navaratnam and Emelia Sithole-Matarise
Puma Hires A$AP Rocky as Artistic Director of Method 1 Partnership
The acclaimed rapper and frequent style collaborator will design a capsule assortment to be launched on the Las Vegas Grand Prix in November. In future seasons, he may have wider artistic management over the model’s multi-year licensing cope with F1.