May 7, 2020 / 6:34 AM / 25 days ago

Puma limbers up for exercise-driven recovery

BERLIN (Reuters) - Puma (PUMG.DE) expects its second-quarter results will be worse than the first as so many stores are closed in coronavirus lockdowns, but the German sportswear firm is optimistic sales will bounce back as the crisis has led more people to exercise.

FILE PHOTO: A handbag with the logo of German sports goods firm Puma is pictured in a shop after the company's annual news conference in Herzogenaurach February 20, 2014. REUTERS/Michaela Rehle

“Here in Germany, I have never seen so many people run again,” Chief Executive Bjorn Gulden told journalists, noting that stores that have started to reopen have been selling lots of running and walking products, as well as children’s shoes.

Gulden said stores had been opening up faster than Puma had predicted, including in Germany, Austria, Australia and the Netherlands. He hopes China - where sales rose 11% in the first three weeks of January before the pandemic struck - would be back to normal by the end of May and grow again in June.

Fewer people are going shopping in China than before the crisis and some tourist areas are still hard hit, but those customers who come to stores are buying more, Gulden said.

While half sports retail stores are still closed around the world, Puma expects all markets to recover by the end of the year and for growth to return in 2021.

“2021 will be what 2020 should have been,” Gulden said.

Puma shares were up 5.8% at 0816 GMT.

First-quarter sales fell a currency-adjusted 1.3% to 1.3 billion euros ($1.4 billion), while operating earnings dropped 50% to 71.2 million euros, compared with mean analyst forecasts for 1.26 billion and 74 million respectively.

Analysts have said they expect Puma to prove more resilient in the coronavirus crisis than German rival Adidas (ADSGn.DE), which reported last month that first-quarter sales tumbled 19% and also warned of a worse second quarter.

“The strength of demand in the run-up to the crisis has limited the extent of gross margin pain relative to peers,” said Jefferies analyst James Grzinic of Puma.

Puma sales fell 12% in the Asia-Pacific region in the first quarter, but still managed to grow 3.5% in Europe, Middle East and Africa and by 3.1% in the Americas as coronavirus lockdowns only started there in March.

Puma, which already proposed last month to suspend its dividend due to the pandemic, said it had secured a new revolving credit facility of 900 million euros, including 625 million from German state development bank KfW.

E-commerce grew around 40% in the first quarter and by 77% in April, although Gulden said online sales were slowing down again in China as stores reopened.

Reporting by Emma Thomasson; Editing by Michelle Martin and Mark Potter

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