Puma forecasts unpredictable 2020 after drop in quarterly sales and profit
Jul 29, 2020
German sportswear brand Puma on Wednesday said that uncertainty around the coronavirus made forecasts for the full-year impossible after the pandemic hit second quarter sales and profitability.
"The uncertainty surrounding the virus and the fact that the number of infected people globally is still increasing makes it impossible to determine an accurate financial outlook for the full year," said Chief Executive Bjoern Gulden.
Second-quarter sales fell a currency-adjusted 30.7% to €831 million and earnings before interest and taxes slumped to a loss of €114.8 million from €80.3 million a year earlier in what Gulden called "the most difficult quarter I have ever experienced."
Sales lagged an average analyst forecast for €815 million and the EBIT loss was steeper than the analyst forecast of -€113 million.
Coronavirus lockdowns meant that 85% of global sports and fashion retail businesses were closed in the second quarter, Gulden said.
The company focused on ensuring financing and liquidity to survive the crisis and banked on more e-commerce although that was not sufficient to compensate for losses elsewhere.
In May, it secured a revolving credit facility of €900 million, including €625 million from state-owned German bank KfW.
The second quarter started with a 55% decline in sales in April and those in May were down 38%. By the end of June, there was a relative improvement, with sales only down 6% and with 85% of Puma's owned and operated stores open again, Gulden said.
The sporting goods industry is benefiting from more people having taken up exercising. Markets may recover by the end of the year 2020, and 2021 could show growth again but the risk of a second wave of infections remained very high, the CEO said.
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