Puma, a multinational sportswear company with headquarters in Germany, announced first-half (H1) fiscal 2023 (FY23) sales growth of 12.7% YoY to €4,308 million, with the Asia-Pacific and Europe, Middle East, and Africa (EMEA) regions driving the rise.
The EMEA region had a growth of 25.2%, closely followed by Asia-Pacific with significant growth of 26%. In contrast, the Americas area reported a 2.7% decline in sales, which Puma ascribed to difficult macroeconomic conditions, high inventory levels, and the company’s dependence on the US off-price wholesale market.
Puma’s wholesale business showed a strong 9.6% YoY growth in H1 FY23, increasing to €3,327.4 million, while the direct-to-consumer (DTC) business experienced a strong 24.6% YoY growth, reaching €980.9 million. The business also highlighted the rise of owned and operated retail locations, which increased by 24% YoY, and the surge in e-commerce, which increased by 25.6% YoY, raising DTC’s market share to 22.8% from 21.4% in H1 FY22.
The brand’s growth was still being driven by footwear, which saw a 23.5% YoY increase, while apparel and accessories only saw minor growth of 2.9% YoY and 0.8% YoY, respectively. However, Puma’s gross profit margin fell from 46.8 percent in H1 FY22 to 45.7%, a decline of 120 basis points. The operating expenses ratio increased by 80 basis points to 39.3 percent as operating costs increased by 12.5% to €1,691.7 million.
The operating result (EBIT), which fell by 15% to €290.9 million as a result of the margin pressure, had an EBIT margin of 6.8%, down from 8.7% in H1 FY22. The result was a 16.2% fall in net income to €172.3 million and a €1.15 decrease in earnings per share from €1.37 in the prior year.
Sales rose to €2,121 million in Q2 FY23, driven by strong growth in EMEA and Asia-Pacific, particularly Greater China. However, as a result of currency fluctuations, sourcing expenses, and promotions, the gross profit margin fell to 44.8%. Due to DTC growth and higher marketing costs, operational expenditures rose by 6.6% to €843 million. As a result, the EBIT decreased by 21.2% to €115 million, lowering the EBIT margin to 5.4%. The announcement also stated that net income fell by 34.7% to €55 million. Inventory levels increased by 8.1% to €2,146 million at the end of Q2 FY23, returning to normalized levels.
Puma’s CEO, Arne Freundt, stated: “Based on our Q2 performance, we are absolutely on pace to meet our full-year expectation in the transition year 2023. Despite the unstable climate, Puma maintained double-digit growth, exhibiting ongoing strong brand momentum. As the top wholesale partner, we collaborated with our retailers to successfully normalize our inventory levels by the plan despite the market’s elevated inventory levels.
The future trajectory of Puma’s growth depends on our strategic priorities of Brand Elevation, winning in the US, and winning in China. With the announcement of new leaders for global marketing and Mainland China, we have established the necessary organizational basis and are making strong progress on all fronts.
