Puma has warned its first-quarter results will likely be affected by the impact of the coronavirus outbreak in China but remains optimistic about hitting its full-year targets.
The German sportswear company has closed more than half its stores in China and has said its business in other Asian markets has also been affected by the decline of Chinese tourists.
“We expect this also to have a negative impact on our total sales and EBIT for the first quarter of 2020,” the group noted in its fourth-quarter and full-year earnings statement today (19 February).
“The uncertainty regarding the duration of the Covid-19 outbreak and the total impact it could have makes it difficult to forecast the business, but we are currently working under the assumptions that the situation will normalise in the short term and that we then will be able to achieve our full-year targets.”
For the fourth quarter, Puma reported a sales increase of 20.6% to EUR1.48bn (US$1.6bn). EBIT was up 46.8% to EUR55m and net earnings surged 55% to EUR17.8m.
For the full year of 2019, sales were 18.4% higher at EUR5.5bn. EBIT increased 30.5% to EUR440.2m, while net income rose by 40% to EUR262.4m.
In the EMEA region, sales rose by 11.2% to EUR2bn. As a result, the EMEA region exceeded the EUR2bn sales mark for the first time. The main growth drivers were Germany, Spain, Russia, and Turkey.
Americas saw sales increase by 20.6% to EUR1.94bn during the year. The Asia Pacific region delivered the strongest sales growth of 26% to EUR1.56bn. Growth in the region was mainly driven by China and India.
Meanwhile, footwear sales were up 16.8% to EUR2.55bn in the period, while apparel revenues increased by 22.6% to EUR2.07bn. As a result, sales in the apparel division exceeded the EUR2bn sales mark for the first time.
“2019 ended with a very strong fourth quarter for us…. All regions and all product divisions were up by double digits. This made 2019 the best year in Puma’s history…I am very proud of what the team has achieved and think this performance shows the global potential of the Puma brand,” said CEO Bjørn Gulden.
“After a good start into 2020, February has of course been negatively affected by the outbreak of Covid-19. The business in China is currently heavily impacted due to the restrictions and safety measures implemented by the authorities. Business in other markets, especially in Asia, is suffering from lower numbers of Chinese tourists.
“Given the current uncertainty around the virus, it is, of course, impossible to forecast its impact on the business. We will do everything we can in the short term to minimise the damage and remain very positive in the long term both for our industry and for Puma.”
For the full year of 2020, Puma said it is expecting currency-adjusted sales growth of around 10% and an EBIT in a range between EUR500m-EUR520m. The group also expects a “significant improvement” of net earnings in 2020.