Booming Puma aims to achieve EBIT margin of over 10% within next 3 years
today Feb 17, 2019
With double-digit growth in all geographical regions, Puma was booming once again in 2018. Following an increase of 15.9% in 2017, the German group outdid itself in 2018 with growth of 17.6% (+12.4% reported) in revenue, currency adjusted to 4.65 billion euros.
Above all, the sportswear company led by CEO Bjørn Gulden improved its profitability, a major focus of its 2022 targets. In 2018 the group's operating result (EBIT) improved 37.9% compared to 2017, hitting 337 million euros.
"The double-digit growth in all regions is a proof that the we have strenghtened the PUMA brand globally and the double-digit growth in all product divisions shows that we have enhanced our product portfolio," explained Gulden in a release. "We still have a lot to improve, but we feel we are moving our brand and company in a good direction. We see that our progress will also continue in 2019 and expect our currency adjusted sales to grow around 10% and our operating result to increase to a range between 395 million euros and 415 million euros."
The group has even announced that it aims to achieve an EBIT margin of 10% within the next three years. Puma can confidently shoot for this target as it already upped its investments in marketing and retail (+13% compared to 2017) last year, in order to support football sponsorships and the signing of new athletes and artists, such as French sprinter Jimmy Vicaut and model Adriana Lima, as well as the launch of new sneaker models and the company's return to the basketball segment with Jay-Z as the division's creative director.
Puma's growth in 2018 was driven by the Asia-Pacific region, where the group's sales increased 28.8% (24.2% reported) to 1.24 billion euros, pushed particularly by China and South Korea, as well a 37.9% rise in footwear sales throughout the region.
In the Americas, Puma announced that sales increased 16.9% (7.9% reported) to 1.61 billion euros. Here, however, rather than footwear, it was apparel which saw the strongest growth.
Finally, with total sales of 1.8 billion euros, the Europe, Middle East and Africa (EMEA) region, saw growth of 9.4% (11.4% reported), which was driven by particularly strong sales in France, Spain and the UK. Here again it was apparel which led the rise in sales with growth of 18.4%, compared to footwear's 8.6% increase.
Footwear nonetheless remains the group's flagship category, reporting growth of 10.6% to 2.19 billion euros, thereby surpassing the 2 billion mark for the first time in the company's history. In particular, Puma highlighted the successful launches of its Thunder, RS-0 and RS-X models.
Apparel sales rose 17% to 1.69 billion euros, while accessories accounted for 776 million euros of the company's total revenue, thanks to growth of 7.8%.
The group's retail sales also rose 24% to 1.13 billion euros last year.
In 2019, Puma plans to invest 200 million euros in its distribution and logistics structures. Some of this investment will go towards funding a new multichannel distribution centre in Geiselwind, Germany, which should be fully operational by 2021, but the group is also planning to expand and modernise its network of company-owned and operated stores.
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