Net earnings at Puma SE dwindled 61.6 percent in the first quarter to 36.2 million euros as the German activewear firm set a three-stage strategy of “survive, recover, grow again” amid the spiraling coronavirus crisis.
Echoing many of its peers, the company said 2020 started off promisingly, and then COVID-19 emerged in China and virtually shut down the business for six weeks. Revenues in the first three months of the year eased 1.3 percent in currency-adjusted terms to 1.3 billion euros.
“The second quarter will financially be even worse with more than 50 percent of global sports and sport lifestyle space being closed,” said Bjørn Gulden, Puma’s CEO. “APAC with China and Korea is recovering. Europe is hopefully also moving towards a recovery while the Americas, with almost all stores closed, are in the middle of the survive phase.”
Puma blamed currency impacts, lower sales in China, inventory devaluation and return provisions for a 140 basis point drop in its gross profit margin to 47.6 percent.
It will propose suspending its dividend payment at its annual general meeting today, being held digitally.
The company gave no guidance for the balance of the year, with Gulden noting “we are mitigating the impact on our revenues wherever we can by focusing on e-commerce and the markets that are opening up again.”
In the quarter, sales in Asia-Pacific dropped 12 percent in currency-adjusted terms with China, Japan and Korea the most severely impacted countries.
Hit by the health crisis later in the quarter, the EMEA and Americas regions saw revenues increase 3.5 percent and 3.1 percent respectively.
Online sales bounded approximately 40 percent in the quarter.
Footwear improved 1.9 percent while apparel was down 6.3 percent in Q1, Puma said.
This story first appeared on WWD.