The German sportswear company Puma is bracing itself for a tougher second quarter as the majority of sports retail spaces worldwide remain closed due to the ongoing COVID-19 pandemic. However, Puma is confident that all markets will recover by the end of 2020 and expects a return to growth in 2021. This optimistic forecast is based on the fact that the crisis has resulted in an increase in people participating in sports and a shift towards more casual dressing.
In the first quarter, Puma reported a decline in sales of 1.3% amounting to €1.3 billion ($1.40 billion). Operating earnings also took a hit, dropping by 50% to reach €71.2 million, slightly below analyst expectations. Despite these figures, industry analysts believe that Puma will fare better than its German rival Adidas. Adidas recently announced a significant 19% decrease in first-quarter sales and anticipates a more challenging second quarter.
Puma faced a 12% decline in sales in the Asia-Pacific region during the first quarter. However, the company still achieved growth of 3.5% in Europe, the Middle East, and Africa, as well as 3.1% growth in the Americas. This is because lockdown measures were only implemented in these regions in March. In response to the pandemic, Puma has already suspended its dividend and secured a new revolving credit facility of €900 million, with €625 million coming from the German state development bank KfW.
While Asia, particularly China and South Korea, is showing signs of business recovery with the reopening of stores, many retail locations in the Americas remain closed. Puma has observed significant growth in e-commerce, with a rise of around 40% in the first quarter. However, this increase in online sales cannot fully compensate for the loss of sales from physical stores, according to the company. Despite the challenges it currently faces, Puma is maintaining an optimistic outlook for the future and believes in its ability to rebound and grow in the coming year.