Even as Puma laid out a strong set of results and raised its forecast for the year, company executives said Wednesday they were preparing for tough times ahead.
“It was a very good second quarter, a very good first half, for Puma,” the company’s chief executive officer Bjorn Gulden told journalists at a virtual press conference. “But we do see the risks ahead. We strongly believe that we will be going through difficult times again – maybe not because of COVID-19, but because of inflation and an energy crisis and a lot of political tensions.”
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For the second quarter of 2022, Puma reported net sales bounded 18.4 percent to just over 2 billion euros. The company surpassed market expectations of around 1.9 billion euros in sales.
Puma now says it should hit growth in the mid-teens, currency adjusted, for the full year, up from previous guidance of 10 percent growth.
Gulden said the company is going to focus more on lifestyle offerings and, later this year, move further into outdoor apparel with a category called Puma Seasons. Puma was also “getting its act together” to better exploit the brand’s archive of classic retro sneakers, he added.
Puma’s EBIT also exceeded market expectations, improving 34.4 percent to 146 million euros. Market analysts had predicted an EBIT of around 130 million euros.
Gulden warned that the company’s gross margins are under pressure and to achieve its forecast EBIT for 2022 of between 600 million and 700 million euros, Puma will need to sell more, market in a more focused way, and raise prices.
“There is huge pressure on a lot of costs – raw materials, production, energy,” Gulden noted. “So far we have only raised prices in single digits. And we will continue to try and raise prices in a smart way. That means adding new price points instead of making existing shoes more expensive.”
Nonetheless, Gulden predicted mid to high single-digit price rises before the end of this year, and then double-digit increases during 2023.
He also noted that inflation was already markedly different in various markets. For example, Latin America and Turkey were already seeing higher inflation while China and the U.S. would most likely experience lower rates.
The key in high inflation situations, he said, would be reacting quickly and letting local managers set suitable prices.
In the future, eventual price rises in Europe would be higher than in the U.S. because of currency adjustments, Gulden added.