Research that is free to access for all investors. Companies commission these providers to write research about them.
Brokers who write research on their corporate clients and make it available through our main bundle offering.
Research that is paid for directly by asset managers. Only accessible to institutional investors permissioned for access.
Event in Progress:
View the latest research on other companies in the sector.
Visibility low, downgrade to Neutral After Puma''s profit warning in January, we argued in Catastrophe or speedbump? that its trough valuation multiple still offered upside opportunities. However, following management''s profit guidance which sits below consensus due to worsening sales trends and currencies, we now see less scope for a near-term re-rating. We are concerned that profits may decline for several quarters, and, with visibility this low, we downgrade to Neutral. What happened? A sharp slowdown in sales growth in Q1, caused by consumer weakness in the US and China, has led wholesale partners to rephase product deliveries, materially impacting Puma''s profits. The company expects Q1 sales to decline and for profits to more than halve year-on-year. We detailed this in 2025 guidance: dead cat trounced. The progression of profits this year depends on delivering cost savings, which are likely to be weighted towards the second-half. Phasing uncertainties Given the sudden slowdown in sales in February, it is difficult to have strong conviction that sales will recover as early as Q2, although the timing of Easter should help, and management remains confident about its wholesale order book later in the year. The timing of the cost saving delivery is also uncertain. Management has already guided Q1 Adj. EBIT to fall to EUR 70m (1Q24 EUR 159m) and we think it reasonably likely that profits again decline year-on-year in Q2. Cutting 2025 estimates by a further c.30%, TP to EUR 25 Management''s 2025 Adjusted EBIT guidance range is EUR 520-600m. We cut to below the mid-point, EUR 548m. This relies on second-half profits increasing year-on-year, aided by cost efficiency. In this period of uncertainty the investment case relies on valuation rather than any obvious catalyst. Our lowered price target implies 2025 P/E of 15x, which seems reasonable. Neutral.
PUMA SE
What happened? Having already pre-announced FY Dec-24 headlines back in January, after market Puma pre-released its 2025 guidance ahead of publishing its full year results tomorrow. Its 2025 Adj. EBIT guidance is EUR 520-600m, which at the mid-point is around 20% below consensus of EUR 689m. It guides low-to-mid-single-digit constant currency sales growth compared with consensus at +7.0%. It also provides Q1 guidance, expecting a low-single-digit negative growth rate and Adj. EBIT of just EUR 70m, less than half the prior year level. We expect the company to publish its detailed FY Dec-24 results tomorrow morning. BNPP Exane View: pain, no gain This guidance is significantly below expectations, with the 2025 Adj. EBIT guidance range 13-25% below consensus. Investors may view it as being even worse than this. The Adj. EBIT includes a EUR 100m benefit from a cost-efficiency programme while it treats the EUR 75m one-time costs to achieve these savings as adjusting items. Moreover, a large part of the miss appears to be in Q1 (Adj. EBIT guidance EUR 70m versus consensus EUR 189m, BNPP Exane EUR 159m), with year-on-year sales declines which it attributes to softness in US and China, as well as some other factors. The market may worry that the full year guidance assumes a normalisation in later quarters which may not materialise. Likely direction of consensus 2025 Adj. EBIT guidance of EUR 520-600m is 13-25% below consensus of EUR 689m. Moreover, Statutory EBIT guidance of EUR 445-525m, after EUR 75m one offs, could lead to consensus reported EPS of EUR 2.45 falling to around the EUR 1.45 ball-park or lower. Anticipated market reaction Puma shares are already -36% against the Stoxx 600 Euro Retail -4% but we do not think the share price anticipates such substantial consensus downgrades. We expect the shares to open down double-digits tomorrow. Conference call The earnings call will be held at 15.00 CET / 14.00 UK. A listen-only webcast is...
Getting back on track After Puma''s disappointing Q4 results, today''s analyst conference call shed more light on the quarter. Although the +9.8% constant currency sales growth in Q4 was a solid outcome, albeit lower than consensus, profitability was particularly disappointing. Management''s swift cost-cutting measures suggest a more challenging outlook. We cut our forecasts and target price but maintain our Outperform rating, as we still see potential for multiple expansion as profitability improves. Conference call takeaways Given the significant attention surrounding one sneaker, we were surprised by the lack of questions about Speedcat, although management remained upbeat about its prospects. We provide key takeaways from the call inside. Forecast changes Management will provide 2025 guidance on 12 March. We have reduced our 2025 EBIT forecast from EUR 740m to EUR 680m, reflecting a lower base and factoring in lower sales growth and no gross margin expansion. Our EPS forecast decreases further, reflecting the disappointing net income progression in the last quarter. Nevertheless, we still anticipate EPS growth of over 20% based on +7.5% cFX sales growth, stable gross margins and a stable cost-to-sales ratio. Outperform, target price lowered to EUR 40 We have made more conservative assumptions in our DCF valuation, including lowering our terminal operating margin to 8.5%, management''s 2027 guidance, from 10%, its longer-term ambition. Despite this, we still see significant upside to the shares and maintain our Outperform rating. The stock currently (at EUR 31) trades on 2025 P/E 13.3x, based on our forecasts. Our target price implies that Puma shares will maintain this forward multiple as its earnings grow.
Q4 pre-release: what happened? Puma released its preliminary Q4/FY results after market close. Q4 constant currency sales growth of +9.8% fell short of consensus expectations of +11.9%. As a result, full year EBIT of EUR 622m came in 3% below consensus while higher finance costs and non-controlling interests resulted in at Net Income of EUR 282m, an 11% miss. The company has not provided 2025 guidance but has initiated a cost efficiency programme and pushed out its EBIT margin ambitions, to 8.5% by 2027, albeit consensus already only sits at 8.6% for that year. BNPP Exane View: in line sales but profit miss, goal posts for 8.5% margin moved to 2027 There are disappointments on several fronts. Group revenues were in-line but constant currency growth missed, in particular Q4 wholesale cFX sales growth improved but only to +6.9%. In its recent ''aide memoire'' Puma had not reiterated its aim to achieve the mid-point of guidance, so the market may have anticipated an EBIT miss, but the Net Income miss is material. The mid-term commentary makes difficult reading, albeit the 2027 margin target of 8.5% is close to consensus at 8.6%. Consensus FY 2025 EBIT is likely to fall by at least 5% from EUR 750m to EUR 710m, assuming a linear margin progression out to 2027. Despite recent weakness, Puma shares are likely to open down. Likely direction of consensus: Puma has not provided FY25 guidance but we would expect consensus EBIT margin expectations to moderate. FY25 consensus EBIT could fall by at least mid-single digits while Net Income consensus could fall by more. Anticipated market reaction Puma shares were -12% in 2024 and month to date are -6% compared with Adidas +9%. There''s not much for the bulls other than the initiation of the cost efficiency programme and the fact that consensus only sits at 8.6% margins in 2027. Bears will point to the Q4 miss as well as the EBIT margin guidance. We expect Puma shares to open down tomorrow. Conference...
Results as advertised, now to 2025; raising TP to EUR 49 Puma''s Q3 results met consensus expectations and a bullish conference call reversed early share weakness. Management said that October had started well and it expects double-digit growth in Q4 across all channels and regions. The Speedcat shoe''s momentum is driving its confidence, both initial sell-out and the forward order book. With a robust outlook for Q4 and improved 2025 visibility, we reiterate our Outperform. Q3 delivered, Q4 guidance robust Q3 EBIT of EUR 237m beat consensus EUR 231m, while EPS was in line. Direct-to-consumer sales growth remained strong (+17%), and Wholesale turned modestly positive (+1.5%). Management''s Q4 guidance is robust, with double-digit growth implied for October. It maintained full year guidance, directing the market to the mid-point for Q4 EBIT (EUR 132m), where consensus currently sits. Looking ahead to 2025 Next year is crucial for Puma, with ambitious sales targets supported by a strong order book. Management expects absolute profit growth and margin expansion. It is bullish on its Speedcat product, calling its performance in Asia ''very encouraging'' and expects to sell mid-single-digit millions of units in 2025. Lifestyle apparel is also poised to improve next year, driven by a halo effect and a stronger H1 25 order book. Reiterate Outperform We lower our FY24 forecasts as we had underestimated Q3 interest costs, but our call is focused on brand momentum driving a multiple re-rating. Q3 results give us more confidence about this. We raise our long-term margin estimate to 10% (broadly what the company achieved last quarter) and increase our DCF-derived price target to EUR 49 (from EUR 45).
Q3 results: what happened? Puma''s Q3 results are in line with expectations. Constant currency sales growth was 5.0%, meeting management''s mid-single-digit guide. EBIT of EUR 237m slightly beat consensus of EUR 231m, while EPS was in line. Management leaves its FY24 EBIT guidance unchanged at EUR 620-670m. BNPP Exane View: EBIT in line, guidance maintained Overall we expect these results to be overshadowed by world events today - other things equal the shares should be fairly neutral. Q3 profits were slightly head of consensus expectations but EPS was in line. In the detail, DTC sales growth slowed modestly while Wholesale accelerated as expected, albeit the growth is modest. Management''s unchanged FY EBIT guidance range of EUR 620-670m suggests that consensus is unlikely to change. We think 2025 is more important for the stock and the earnings call at 3pm CET should hopefully provide more on the outlook. Likely direction of consensus FY24 EBIT consensus sits at EUR 640m, just below the middle of the reiterated EUR 620-670m guided range. We expect consensus to remain broadly unchanged today. Anticipated market reaction Puma shares are -17% year to date (versus DAX40 index +15%). Bulls will point to the EBIT beat, the continued strong DTC growth and the strong wholesale order book; Bears will point to the shallow recovery in wholesale and sales miss in EMEA. In a normal market - unlikely today given the US election - we would expect the share price reaction to be fairly neutral. Conference call Presentation and QandA at 3pm CET / 2pm UK. A listen-only webcast is available on the corporate website. Valuation Puma trades on CY24 P/E of 19.0x and CY25 P/E of 14.3x on our forecasts (at EUR 42.1). Main points from Q3 results . Q3 constant currency sales growth: Puma''s Q3 cFX sales growth of +5.0% was in line with sell-side expectations (Visible Alpha consensus +5.0%) and guidance of mid-single-digit growth. . Q3 cFX sales detail: by...
Full year guidance trimmed after Q2 miss Puma shares fell sharply today on the back of disappointing Q2 results and full year guidance being trimmed. It threw into sharp relief the positive momentum over at rival Adidas (+). Puma''s product pipeline should build towards the end of the year but in the short term we see no rush for investors to revisit the stock, particularly with Q3 profits guided down-to-flattish. Adidas is our preferred play among the brands, as set out in Stripes vs Swoosh. Q2 summary - the market had expected more The punchline from Q2 was that investors were expecting a sales beat, and it did not materialise. Constant currency growth of +2.1% was below already-lowered sell-side expectations, and we think that investors expected a beat. Adidas was +16% year-on-year excluding Yeezy in the same quarter. Puma''s Q2 EBIT was c.2% below consensus, and higher financial charges meant that Q2 EPS missed by over 20% (see Figure 4). H2 outlook - an unexpected trim to guidance Management reiterated its full year sales guidance but narrowed its profit guidance, with the mid-point falling c.2.3% (see Figure 6). It said that profits in Q3 would be down-to-flattish year-on-year, before more than 40% growth in profits in Q4, helped by the reversal of last year''s Argentina peso devaluation. The company attributed this to external factors such as freight surcharges, increased duties in Mexico and muted consumer demand in China. Forecasts cut c.8%, price target lowered to EUR 42 Puma shares fell c.11% today. As well as banking the Q2 miss we trim our H2 expectations, with our full year EBIT falling to EUR 656m from EUR 685m. Hence, we sit towards the top end of the new guidance range. We cut our DCF-derived price target to EUR 42 and continue to prefer Adidas (+) and JD Sports (+) in the sports sector. See inside for 15 questions for management.
Puma Q2 preview - results due pre-market on 7 August Management today published a short recap of guidance ahead of the quiet period. Our forecasts for the quarter are unchanged besides some small mark-to-market currency adjustments. The company, like most of the rest of the sports sector, has said that profits this year will be quite back-end loaded, so the prospect of material positive surprises seems limited. We believe the focus of the results is likely to be on the degree of inflection expected in Q3. Our full year estimates are broadly unchanged. Q2 expectations: c.+3% constant currency sales In May, management commented that it was comfortable with Q2 expectations of c.+2% to +3% cFX sales growth, and we model +3%, with each region improving sequentially, although this growth is offset by a negative currency contribution. Gross margin should rise more than in Q1 (we model +120bps yoy) thanks to slightly lower currency and promotion headwinds, although the freight situation is uncertain. Operating cost ratios may worsen year-over-year due to currency and the global brand campaign costs. We model Q2 EBIT of EUR c.123m, trimmed by EUR 2m due to FX. We land at Q2 EPS EUR 0.34, mindful of volatility in the financial result line (see Figure 2). Full Year 2024: back-end loaded We expect management to reiterate its full year EBIT guidance of EUR 620-700m. Consensus currently sits around the mid-point while we sit at EUR 685m. We think that investor focus will remain on Puma''s order books, the timing of its lo-profile inventory drops and the shape of the H2 recovery. Reiterate Neutral Puma shares rose sharply on Q1 results in May but have drifted since. We see limited catalysts in the near term - although we keep a keen eye on Austria and Switzerland''s progress through Euro 2024 - with more excitement about the product pipeline likely to build heading into 2025. We leave our headline forecasts unchanged (apart from minor FX adjustments) and our...
We have adjusted our estimates following the company''s Q1 results. We make modest EPS revisions and our DCF-derived target price rises due to the passage of time. We do not consider the changes to be material; our rating is unchanged.
Puma Q1 preview - results due pre-market on 8 May Management today published a short recap of its guidance ahead of the quiet period. We set our forecasts for the quarter but do not expect the results to be a catalyst event. The company, like most of the sports sector, has said that profits this year will be quite back-end loaded, so the prospect of material positive surprises seems limited. We make minor, non-material changes to FY estimates. Q1 expectations - flattish constant currency sales Management already provided commentary on sales at the start of the quarter, and we model flattish sales (cFX -1%) in line with this, plus a negative currency contribution (c.-4%). Several big moving parts in the gross margin make it a hard one to call (positive channel mix and input costs, negative currency and markdown), but flattish seems reasonable to us. We assume some operational de-leverage, taking us to Q1 EBIT of EUR c.145m. In the absence of guidance, we''re more cautious on financial charges than consensus, and we land at EPS EUR 0.51 (see Figure 2). Full Year 2024 - back-end loaded We expect management to reiterate its full year EBIT guidance of EUR 620m-700m. Consensus currently sits around the mid-point while we sit at EUR 675m. We think that investor focus will be on Puma''s order books; management has previously said that these suggest the US should be back in growth in Q3 at the latest. Reiterate Neutral Puma shares have been flattish since the FY results and through the Capital Markets Event held six weeks ago. We see limited catalysts in the near term, with more excitement about the product pipeline likely to build heading into 2025. We leave our rating unchanged.
We have adjusted our estimates following yesterday and today''s Capital Markets Day. Management announced an increase in its dividend payout ratio to 25%-40% (previously: 25%-35%). It also introduced a new share buyback policy of 10%-25% of net income, with a total combined payout of up to 50%. As part of this it announced a EUR 100m share buyback, for cancellation, starting in March 2024 for a period ending 6 May 2025. We have reflected this announcement in our DPS and EPS forecasts. We do not consider the changes to be material; our rating is unchanged.
No big surprises in FY results Puma had pre-released its full year results and given preliminary 2024 guidance back in late-January. Today''s full set of results added some regional detail to the Q4 23 results, highlighted an impressive inventory reduction, and reiterated the 2024 EBIT guidance. Profits are likely to be H2-weighted, with near term trading commentary relatively downbeat. We adjust our estimates, having not changed them post-warning, and look ahead to the CMD later this week. We stick to our Neutral rating. Q4 summary - pre-released but a few more details Today''s results provided the detail behind the pre-released Q4 headlines. Inventory was tightly controlled (EUR 1.8bn vs Visible Alpha consensus EUR 2.0bn, BNPP Exane EUR 1.9bn) but management said there is still too much inventory in the wholesale channel in China and the US. Outlook - unchanged guidance but flagging a soft start to the year Management reiterated its 2024 guidance (mid-single-digit constant currency sales growth, EBIT EUR 620-700m), albeit added that Net Income should progress in line with EBIT. This implies some hang-over of financial charges relating to Argentina. Management expects flattish constant currency sales in Q1 because January was weak in its major markets, albeit EMEA significantly improved in February. Management did not comment on its 2025 margin target of 10% but will likely address this topic at its Capital Markets Event later this week (29 February and 1 March). Cutting estimates in line with guidance, target price down to EUR 48 We adjust our estimates for management''s 2024 profit guidance, forecasting 2024 EBIT of EUR 675m (consensus EUR 676m). We model 2025 EBIT margins of 8%. Our price target falls to EUR 48 (from EUR 60), given the sharp reduction in profit forecasts and now based on long term margins of c.9%. We maintain our Neutral rating and prefer Adidas (+) and JD Sports (+) in the sports sector.
Q3 more solid than feared Consensus expectations had fallen before Q3 results, but today management reiterated its full year sales and profit guidance. Improved trading in October, gross margin momentum and reduced inventory levels all support the solid outlook. Management also said that its product pipeline was the best in a decade, supported by a growing roster of ambassadors and influencers, which now includes A$AP Rocky as Creative Director for Puma x F1. Our EBIT forecast edges up but EPS falls, and we maintain our Neutral rating. Q3 summary - beats EBIT expectations which had been lowered into the print The Q3 punchline was that EBIT was 2% ahead but EPS was 5% below expectations. However, gross margins beat expectations and inventory days are now below 2019 levels. Relative to investor fears ahead of the results, and falling sell-side consensus forecasts in recent weeks, today''s news was solid in our view. Outlook - unchanged guidance but some signs of increased confidence Puma maintained its full year 2023 EBIT guidance at EUR 590m-670m. Management said that it is confident of delivering the mid-point, implying Q4 EBIT of a little above EUR 100m, subject to no major changes in the currency or demand situation. Given the volatile geopolitical and macroeconomic environment there are still risks, but we expect these results have given investors more confidence in achieving this mid-point. This implies consensus is likely to be unchanged or may edge upwards. Minor changes to forecasts We increase our full year 2023 EBIT forecast by c.1% while EPS falls c.2% on higher financial charges. Management did not comment on the 2024 outlook but we remain below consensus. Our price target edges down to EUR 60 (from EUR 63), based on long term margins of c.10%, and we prefer Adidas (+) and JD Sports (+) in the sports sector. We maintain our Neutral rating.
Puma Q3 preview - due pre-market on 24 October Puma''s shares fell sharply this week on investor fears of slower sales momentum during Q3. We publish our estimates ahead of the Q3 results, released on 24 October. We trim our Q3 EBIT forecast from EUR 238m to EUR 232m, with gross margin and costs largely compensating for weaker topline, although our full year estimates fall by c.3% as we factor in slower sales momentum into Q4. We maintain our Neutral rating. Q3 expectations - lowered into the print At its Q2 results, management had suggested that if Puma''s sales momentum in Q2 and July continued for the rest of Q3 then it might need to raise its full year ''high single digit'' sales guidance. We expect this optimism to have given way to the realities of a slower consumer environment in North America and Asia. The prospect of a sales guidance upgrade and an earnings beat looks lower now, in our view. Full Year 2023 - in the right ball-park Management guidance is for FY23 high-single-digit currency neutral sales growth and underlying EBIT of EUR 590-670m. We expect it to reiterate this guidance at its Q3 results later this month. Consensus (Visible Alpha, 4 October), sits at EUR 635m. We think this is in the right ball-park (we model EUR 630m) but it strikes us that in the absence of upgrades, the c.29% EBIT growth being assumed by consensus for 2024 seems like a high bar. Reiterate Neutral We remain below consensus for 2024, which looks for c.29% EBIT growth (see Figure 4 for details). Our price target edges down to EUR 63 (from EUR 64), based on long term margins of c.10%, but we prefer Adidas (+) and JD Sports (+) in the sports sector. We maintain our Neutral rating.
Full year guidance upside after Q2 sales beat The key takeaway from Puma''s Q2 results was that management said it is ''perfectly on track'' to meet full year guidance. It noted that Q3 had started favourably and that it could adjust its full year outlook in due course. We think this is more of a sales comment, given gross margin pressure in the quarter, rather than a profit comment, but our EPS forecasts edge upwards. We do think, however, that the overall sporting goods environment is now broadly past some of its supply challenges, and the focus should be on brand heat, macro and gross margin recovery. Adidas is our preferred play among the brands, as set out in ADIDAS (+) / INDITEX (=) : From Z to A. Q2 summary - sales beat was the main surprise The punchline from Q2 was that the year is on track, with Q2 registering stronger sales than expected, including a small 100-200bps pull-forward from Q3 shipments. Q2 EBIT beat and EPS missed slightly. North America remains the weak spot and we estimate the growth in China only slightly improved compared with Q1 when compared with 2019 levels. EEMEA, notably Turkey, Ukraine and Middle East, drove over-proportionate growth. H2 outlook - uncertain outlook but a good start to Q3 Management has not changed its guidance, but comments about July trading suggest that Q3 has started ahead of its low/mid-single-digit guidance. The gross margin trajectory improves in H2, as it should for other players in the industry, thanks to lower promotions and lower sourcing costs, although currency will probably remain a headwind into next year. Forecasts broadly unchanged We bank the Q2 EBIT beat but our FY23 EPS forecasts only edge upwards. We remain below consensus for 2024, which looks for c.27% EBIT and c.33% EPS growth. Our price target ticks up to EUR 64, based on long term margins of c.10%, but we prefer Adidas (+) and JD Sports (+) in the sports sector.
Q1 in line, sales slow from here Puma delivered Q1 profits in line with expectations and an EPS beat, although the inventory pile reduced less than hoped. China returned to growth, compensating for a sharp decline in the US where management is containing sales into the off-price channel. But how to play the fade in revenue growth to low/mid-single digits when investors are used to double-digit growth from Puma? We think the stock lacks positive catalysts and maintain our neutral rating. A few surprises in Q1 results Sales and profits were in line with expectations, as Figure 1 overleaf shows. China sales growth of 10%, with mid-teens sell out in Direct to Consumer, is encouraging. Conversely, North America fell c.-19% and we estimate this includes a 30% reduction in wholesale. However, EPS was 10% ahead on lower minority interest charges, reflecting this slowdown of sell-in to the value and off-price channels in the US. There was a large working capital outflow in the quarter also, although most of this looks like timing effects. Q2 and Q3 outlook: spectator sport Management guided low/mid-single digit sales growth for Q2 and indicated the same for Q3. Outside Covid-affected 2020, Puma has delivered double-digit growth every quarter since Q2 16. With an expected gross margin decline in Q2 and costs rising above sales growth, we expect profits to be weak. As we explored in HandM / Puma: Playing for the next 10%, we think the stock lacks catalysts. Tweaking forecasts, remain on the sidelines We trim full year EBIT from EUR 645m to EUR 640m but lift our EPS forecasts by c.2%, largely due to lower minority charges. The stock (at EUR 55.6) trades on CY23 P/E 22.4x and CY24 P/E 17.5x on our forecasts. Our DCF-driven target price assumes long term margins of 10% so we can see a value argument, but see limited near term drivers.
Cat offers something for bulls and bears Puma delivered FY22 results in line with expectations but guided slightly more conservatively than expected for 2023. The main encouragement for bulls is that Puma''s brand momentum remains strong, likely further boosted by a new collaboration with Rihanna, and that management''s 2025 margin guidance is ahead of consensus. However, the near-term looks a little more challenging and Puma has been a multi-year consensus long. Growth is slowing and competition increasing, and trading on 2023 P/E of over 20x we maintain our Neutral rating. Q4 results left us feline underwhelmed Q4 profits were in line with expectations, albeit the quarter is a small contributor to annual profits. Inventory was higher than expected but so too was net cash. Footwear and US/EMEA regions outperformed while China was (unsurprisingly) weak. China was just c.6% of group sales in 2022, compared with almost 14% in 2019. 2023 Guidance: cautious, and there''s work to do Full year guidance of high single-digit sales growth and EBIT EUR 590-670m was a bit light of expectations, perhaps EUR c.20m at the mid-point. On the results conference call, management said its priorities were: 1/ increase brand strength; 2/ build in the US; 3/ rebound in China. Management acknowledging that it needs to improve its wholesale distribution in the US was a bit of a surprise. Let sleeping cats lie: maintain Neutral rating Puma''s brand momentum remains strong, but with a bit less gearing to China than peers we''re not quite sure what will get the fans excited in the very short term. Our 2023 EBIT forecast falls by c.1% while EPS falls c.5%. We trim our DCF-based target price to EUR 66 (from EUR 68). This remains based on a terminal EBIT margin of 10%. We prefer to play sporting goods via JD Sports (+).
A cautious but confident cat Puma''s FY results were all about mgmt''s 2022 guidance since Q4 21 had been pre-released. On balance we felt the full year guidance was quite encouraging from a historically conservative management team. We raise our 2022 EBIT forecasts by c.4%, although we remain a touch below consensus and the top end of guidance, and our EPS forecasts are broadly unchanged. We do see upside risk if the environment remains steady, however, and maintain our Outperform rating. Q4 results: China the only area of weakness Although Q4 headlines had been pre-released, the detail revealed a small EPS miss, a DPS beat, stronger cash generation despite higher inventories (which were largely due to goods in transit) and a notably weak performance in China. Constant currency sales were -27% yoy in China during Q4 as weak footfall caused by Covid lockdowns compounded by the difficulty western brands are having marketing and selling online. Guidance for 2022: couldn''t have hoped for more Management guided for ''at least'' 10% cFX sales growth in 2022 (consensus c.+12%). It said that January was already double-digit and that the wholesale order book was the strongest ever, which implies 30% yoy. EBIT guidance of EUR 600-700m was also quite encouraging, given the company''s historical conservatism, with the top-end of the range in line with consensus (EUR 701m). We raise from EUR 645m to EUR 670m. Our EPS forecasts for 2022 and 2023 remain broadly unchanged, with 2023 EBIT margin a touch under management''s 10% ambition. Valuation: still an undervalued player We continue to see attractive sales and margin potential. Its high near-term multiple (CY22 P/E c.32.6x at EUR 86.9) should fall sharply to CY23 P/E c.24.4x and reverse DCF implies the market is only pricing in 10% EBIT margins in the long term. Our price target is based on DCF valuation which assumes long term margins of 14%; we trim it as we apply the same valuation assumptions to...
PUMA ended the year with both the top line and profitability in line with consensus expectations. The beginning of FY22 continues to be impacted by the disrupted supply chain, inflationary pressure and geopolitical uncertainties, which led the group to release a cautious outlook for FY22. In particular, the “boycott” situation and resurgence of COVID-19 in China continue to weigh on the group’s activity in the country.
Quickly out of the blocks: Puma pre-releases Q4/FY results Puma reported headline results for Q4/FY this morning. Full year EBIT of EUR557m came in 7% ahead of consensus and 10% ahead of our own forecasts. Sales momentum has been stronger than expected despite supply constraints. We bank the FY21 profits but leave FY22 forecasts unchanged. We see upside from here, and maintain our Outperform rating. 2021 personal best: Q4 beats on sales and profits Q4 is typically a small quarter in terms of profitability, but stronger results drove a 7% consensus full year profit beat. Q4 constant currency sales growth of +14% was ahead of consensus (+9%) and driven by continued strength in Americas and EMEA. We estimate APAC to have declined c.3% YoY, with covid restrictions impacting China. Eyes on the 2022 prize: forecasts unchanged We have left our FY22 forecasts unchanged at EBIT (EUR645m). This is below consensus (EUR700m prior to today) and we see upside potential, but we think that management''s guidance (due in February) will be prudent and be in the ball-park of our forecasts. We model cFX sales +7.5% (40% higher than pre-covid), gross margins +75bps and EBIT margins +60bps to 8.8% because growth is likely to be weighted to the lower-margin Americas region. Key debates will be the short-term impact of covid and supply constraints (increasingly related to logistics absenteeism rather than production shortages) and the path of recovery in China. The cash on the balance sheet might begin to be a focus too. Valuation: still an undervalued player We continue to see attractive sales and margin potential. Puma trades on optically high near-term multiples (CY22 P/E c.35x) but we think valuation remains attractive given its growth potential. This is supported by our DCF valuation which assumes long term margins of 14%.
Out in front: another beat Despite ongoing supply chain challenges Puma delivered a record absolute quarterly profit in Q3 and a consensus beat driven by sales. The results leave us more confident about Q4 profits, China, the supply outlook for Q1, and margins for 2022. The risks haven''t gone away, but the company has navigated through them well so far, and we still see Puma as an outperformer. Q3 sets up a full year personal best Q3 EBIT of EUR c.229m was 13% ahead of consensus, driven by a 5% sales beat and good operating leverage. This was despite more than EUR 200m of sales lost to supply constraints and higher sourcing costs. The exit rate from the quarter, on a two-year stacked sales growth rate, was the strongest of the year (see Figure 1) despite continued pressure in China caused by the cotton controversy and boycott of Western brands. The cat''s out of the bag: Q4 guidance is conservative Management raised its guidance for FY EBIT to EUR 450-500m, which would represent record profits. Even the top end implies Q4 profits fall heavily from EUR 63m last year (to EUR 8m this year), which we think is unlikely. We factor in EUR 200m lost sales from supply constraints but land above guidance, on full year EBIT of EUR 518m. Valuation: still an undervalued player We bank the Q3 beat, leaving Q4 unchanged, and our target price rises by 2%. We continue to see attractive sales and margin potential. Puma trades on optically high near-term margins but we think Puma remains attractively valued. This is supported by our DCF valuation which assumes long term margins of 14%, just 200bps higher than Puma achieved this quarter. Inside we set out 15 questions for management and key highlights from the Q3 conference call.
PUMA experienced a better-than-expected Q3 21. The strong demand in the Americas, favourable channel mix and less promotional activity have limited the impact of supply-chain challenges and ongoing COVID-19-related restrictions in Asia. The ongoing industry-wide supply-chain disruptions and the continued challenging trading environment in China have led the group to upgrade conservatively its FY 21 outlook. The current market expectations were already broadly in line with the updated guidance.
PUMA has published its Q2 21 results, in line with the preliminary release. The robust growth in North America and gradual recovery in EMEA have led the top line to exceed the 2019 level. The trading performance in China has been affected by the “boycott over Xinjiang cotton”, sales slid 5% yoy. The gross margin has significantly improved from last year, despite supply chain constraints. However, on the back of the strong quarter, the conservative guidance for FY21 leaves some shadow.
No nap for the cat: Puma pre-releases strong Q2 results Puma today pre-released its Q2 headline results and gave more specific guidance on full year profits, ahead of full publication on 29 July. Q2 profits were EUR c.30m ahead of consensus (c.35%) driven, in particular, by strength in North America. We move our EBIT forecasts to the top of the full year guided range (EUR 500m, +9%) and maintain our outperform rating. Q2: cat and mouse We had raised our Q2 expectations at the pre-close stage but today Puma said Q2 EBIT would be EUR 109m, compared with consensus/Exane forecasts of EUR c.80m. This c.35% beat was driven by substantially stronger sales: +96% cFX growth (cons/Exane +75%) implying a two-year growth rate of +36% (vs +22% expected). We are encouraged to see such strong margins (c.130bps higher than expected, at 6.9%): compared with Q2 2019 sales are 30% higher (in reported currency) and we estimate that costs are c.24% higher, so leverage is coming through nicely. A paws on upgrades? Management gave more specific full year guidance today. It expects full year cFX sales growth of ''at least 20%'' (previously ''mid-teens''), which was already factored in (cons +23.6% and Exane +22.1% prior to today). It also guided full year EBIT of EUR 400-500m (previously only ''a significant improvement''). Prior to today consensus was at EUR 484m and Exane EUR 460m. Management acknowledged the external risks, qualifying the guidance as ''subject to continued manufacturing operations in our key sourcing countries such as Vietnam and China and no major interruptions due to COVID-19''. In recent days the industry has seen Covid-related factory shut-downs in Vietnam. Feline good about the full year We are not discouraged by the guided full year profit range and raise our EBIT forecast to the top of this, at EUR 500m (mostly from banking the Q2 beat). Our TP nudges up to EUR 113 since we maintain our long term margin expectation at 14%. We maintain our...
Puma recorded a strong start to the year. Encouraging sales growth across all régions and all segments confirmed the pandemic-led surge in the consciousness for healthy living and a rekindled trend in athleisure. However, the group’s very cautious view on the trading environment for the rest of the year, highlighting the “boycott on Xinjiang cotton issue” in China has started to weigh visibly on the group’s business since the end of March.
A beat but it''s not enough Puma shares fell today on Q1 results which beat top-end expectations. This was in part because the impact on the brand from political tensions in China appears to be greater than the market had expected. We bank the Q1 beat and see upside risk to earnings, but forecast cautiously given the risks over the next quarter. Another strong quarter Q1 constant currency sales growth of +25.8% was above top-end expectations (Exane +23.1%, Visible Alpha Consensus +19.5%). Q1 EBIT beat by EUR 15m and we bank this, now forecasting full year EBIT of EUR 457m. Our FY20 cFX sales growth of +19% is above ''mid-teens'' guidance. Political risks add to the challenges Puma has c.15% of its stores closed worldwide and shipment delays have also presented a challenge in recent months. In China, 15% of group sales, traffic appears to have slowed by c.30% due to rising political tensions. We take 20%ppts off our China growth rate for the whole of Q2 to reflect the uncertainty of the situation. Thanks to soft comps, we expect Q2 group cFX growth of +64%, though this is ''only'' +14% on a two year basis, slower than Q1''s two-year stack (+24%). Operational leverage We discuss the key takeaways from the analyst call inside and note that operating leverage was a key focus: management acknowledged that the situation was creating unique inefficiencies (closed stores, unusual shift to e-commerce) and were pleased to have returned Q1 EBIT margins to 2019 levels of 10.0%. Our Q2 estimates assume that margins are below 2019 levels because of China. Short term risks but eyes on the prize Puma''s strong brand momentum is not in doubt and the company''s products and initiatives give us confidence that when external factors become more favourable then margin expansion will come through. We maintain our Outperform and EUR 105 target, based on a low-teen long term margin.
Despite the second wave of lockdowns and re-imposed anti-pandemic measures keeping some stores shut, the group achieved top-line and profitability growth in Q4 20. The group expects the ongoing lockdowns in Europe and uncertainty related to the pandemic to continue to weigh on the group’s business until the end of Q2 21, followed by a strong recovery in H2 21.
Cat and mouse on guidance The key today was going to be 2021 guidance and here the short term caution was even louder than anticipated. However, we were reassured by management''s comments on the healthy wholesale order book, more than 30% higher yoy, and to hear that Jan/Feb sales are also in growth. We cut EPS materially, but it feels more precautionary: without new issues emerging the operating leverage could be substantial. The brand remains hot, and we maintain our Outperform Q4 results: good, could have been even better The results were broadly in line with expectations and management proposed the resumption of the dividend. Most notable was the commentary around the US, where supply shortages limited the growth at the end of the quarter. Guidance: cautious, but ready to spring into action in H2 Currently around 50% of doors are closed in Europe and online is not fully compensating for this. Understandably, management guided annual sales cautiously: ''at least a moderate increase in sales at constant currency- with an upside potential''. On the analyst call the colour on Q1 to date, as well as seeing the monthly comps, made it clear that Q1 sales could grow by double-digits, depending on how Puma annualises the weak March 2020. The maths around the comps would still suggest to us that the company can grow sales by healthy double-digits in 2021. Sticking to our Outperform: brand momentum is very strong An order book 30% higher year on year and a strong pipeline of new products and initiatives maintain our confidence that the brand can drive sales growth and margin expansion in 2021 and beyond. We cut our earnings forecasts for this year but are hopeful the company can over-deliver. The stock trades on high near-term multiples (CY22 P/E c.33x) but this reflects margins which are still likely to be single-digit at that stage, with material upside over the medium term.
Out in front: another beat In Q3 Puma delivered its record absolute quarterly profit and a high quality consensus beat. It also pushed forward its strategy by signing Neymar Jr and LaMelo Ball as endorsers, announcing a new women''s platform and continuing to invest in infrastructure. Q4 has started strongly: of course, pandemic risks abound, but we still see Puma as an outperformer. Q3 results: a personal best Q3 EBIT of EUR 189.5m was Puma''s record in a quarter, and beat consensus by 11% despite the bar being raised heading into the results. The quality was high, with sales, EBIT margins, inventory, net cash and earnings all better than expected. Although Asia Pacific was disappointing during the quarter, it is clear that China has been improving since a low point in August. Q4 outlook: up for the challenge The welcome news is that growth in October has been double-digit, the product pipeline is strong, the order book for the next 9-12 months is good, and inventory levels are in a healthy place. If its major territories avoid second lockdowns and retailers don''t cancel orders then the upgrade agenda should continue and the brand looks very well set for 2021. Visibility remains low, however. Valuation: still an undervalued player We nudge up our full year forecasts and target price by 1%, and also set out 15 questions for management. We continue to see attractive sales and margin potential. Puma trades on a CY21 P/E premium to Adidas (c.39.5x vs c.30.2x) but on CY22 forecasts we think Puma remains attractively valued (27.7x vs 24.4x). This is supported by DCF valuation which assumes long term margins of 13%, just 100bps higher than Puma achieved this quarter.
