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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.
Companies: PUMA SE
AlphaValue
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.
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.
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.
The Q2 figures were a little disappointing. Both sales and profitability were hit heavier than expected by the pandemic. In particular, the higher than expected discounts and piling up of seasonal inventory will continue to put pressure on the margin. However, the trading trend since June is very encouraging, which confirms our confidence that the group is in a good position to benefit from the business recovery after the pandemic crisis is over.
The Q1 20 results have been unsurprisingly impacted by the COVID-19 crisis. With over 50% of the group’s stores closed around the world at present, the group’s business will be even more affected in Q2 20. However, the group’s sales contraction was less than peers which shows its business has the greater resilience. The pandemic is increasing people’s focus on sports, especially in Asia. The outlook post-COVID-19 remains encouraging.
Puma delivered formidable numbers for 2019. Some of this is supported by the stronger currency tailwind, but the currency-adjusted revenue growth rate also accelerated from +16.7% in 9M19 to +17.0%. On a reported basis, the growth rate accelerated from 17.6% to 20.6%. However, as purchase prices are typically denominated in US dollars, the gross profit margin was up by ‘only’ 0.2pp in Q4 compared to 0.6pp through to September last year.
Puma’s revenue growth continued at full speed in Q3 but the profit margin improvement moderated considerably. The group’s full-year profit outlook suggests that our current projections are too optimistic. The reasons for the moderate outlook are, among other things, new tariffs imposed by the USA on imports from China.
Although sourcing costs are typically denominated in US dollars and as the dollar has appreciated against the euro, Puma has been able to increase the gross margin by 0.7pp to 49.3% in the last quarter and by 0.8pp to 49.2% in H1 19. According to management, a higher share of in-house retail sales, a better product mix, less discounts, and a positive currency impact have all contributed to this very favourable development.
Revenue growth of 16.6% (currency-adjusted +15.3%) and much stronger profit growth has not allowed management to increase its full-year guidance. It continues to see revenue increasing by about 10% (currency-adjusted) and EBIT coming somewhere between €395m and €415m.
Puma replaces Nike and is believed to pay some €750m over a period of ten years. Assuming this speculation is correct, the annual payments represent approximately 1.5% of Puma’s annual turnover of the next years. Adidas had signed a similar contract with Manchester United in 2014 and that contract was believed to be worth €1bn over a ten-year period. However, this annual amount represents ‘only’ 0.4% of the peer’s annual revenue number. Puma’s strategy over the last years has been to strengthe
2018 consolidated revenue was up by 12% to €4.65bn (+18% currency-adjusted). Simultaneously, EBIT and net earnings both increased by 38% to €337m and €187m, respectively. Management proposes a dividend of €3.50 for the last fiscal year, whereas we had expected €3.00. Our sales and profit projections had been €4.55bn, €349m, and €203m, respectively.
Puma’s revenue growth was about unchanged in Q3 vs. H1, i.e. turnover was up by 10.7% to €1.24bn in the last quarter which brought the ytd number to 3.42bn, an increase of 10.5%. However, EBIT growth fell to 29% to €130m in Q3 which brought the 9M number to €300m, an increase of 40%. The respective net profit numbers were +25% to €78m and +32% to €176m.
Management’s strategy continued paying off in H1. At a glance, the group’s net cash has fallen considerably in H1 18, but this is exclusively the result of the exceptionally high and farewell dividend paid to all shareholders including Kering.
Research Tree provides access to ongoing research coverage, media content and regulatory news on PUMA SE. We currently have 0 research reports from 3 professional analysts.
Watkin Jones’s guidance for FY24E is unchanged in its trading update for the first half to 31 March. We maintain our forecasts for the full year and introduce half-year estimates, in line with reiterated guidance that performance will be significantly H2 weighted. The group confirms a continuing gradual recovery in appetite among institutional investors to forward fund its build-to-rent (BTR) and student developments. We believe this should gather pace as the direction of interest rates becomes
Companies: Watkin Jones Plc
Progressive Equity Research
Ceres Power Holdings’ innovative technology uses electrolysis to produce green hydrogen and solid oxide fuel cells to generate power. In a year where it moved to the Main Market of the London Stock Exchange, it recorded revenue growth of 13% and gross margin expansion to 61% (the highest in the sector, according to management), but is yet to record an operating profit (FY23 operating loss of £59.4m versus £54.0m in FY22). Ceres continued its strategy to drive innovation and technology across sol
Companies: Ceres Power Holdings plc
Edison
Sanderson Design Group (SDG) has announced its FY24 full-year results, which are in line with the headline figures from its February trading update. A record year for Licensing and a strong performance in the key North America market helped to offset a challenging consumer environment in other geographies, most notably the UK. While this backdrop is set to persist in FY25E, the group will continue to focus on its strategic growth drivers, notably North America and Licensing, to deliver sharehold
Companies: Sanderson Design Group PLC
On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div
Companies: PTAL GHH IGP MSLH PINE NXQ EQLS NXR AXL
Zeus Capital
Gooch has issued a positive update for H1. Trading has started to recover with stocking levels normalising at industrial and medical devices customers. The outlook is positive with growth returning, and management has confirmed our full year estimates (adjusted for the disposal of EM4). The order book and order flow appear healthy, and net debt is comfortable. Gooch clearly still has plenty to do to lift operating margins from a lacklustre 8.1%, but the transformation plan appears to be back on
Companies: Gooch & Housego PLC
SCE is raising £16m through a placing (and up to a further £3m through open offer) to fund substantial expansion and additional working capital. This will enable the Group to grow to £75m revenue capacity in the near term, commence the build and equipping of a new factory and then (with internally generated free cash flow) scale to £150m revenue capacity and beyond. With a contracted order book of £190m and a prospective pipeline of £400m, this is clearly the time to seize the opportunity. The e
Companies: Surface Transforms PLC
Cavendish
Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.
Companies: Solid State plc
Subsector price performance: In the fourth quarter to 29 December 2023 all but the AAA publishers and platform subsector saw share price declines. The UK PC and Console focused subsector was again the worst performing subsector (-26.2%) over the quarter and LTM (-70.1%).
Companies: TBLD FDEV DEVO
Surface Transforms has issued new revenue guidance for FY24, with the company now expecting revenues in the range £17.5-22m. We are withdrawing our previous forecasts for FY24 and withdrawing our price target while we review the impact of the new guidance.
Companies: IG Design Group plc
Canaccord Genuity
We are initiating coverage of a.k.a. Brands Holding Corp. ("a.k.a. Brands" or the "company"), a leading owner of primarily online apparel-based brands focused on Generation Z and Millennial consumers, with a Buy rating and $14.00 price target, or 10.9X our 2025 EBITDA projection of $20.2 million. The company's brands include: 1) Princess Polly, focusing on 15 to 25 year-old women; 2) Petal & Pup, which offers feminine styles for 25 to 34 year-old women; 3) Culture Kings, a street wear destinatio
Companies: GPS URBN ITX AEO AEO GES GES ITX GPS ANF 0R32 URBN
Small Cap Consumer Research LLC
Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024
Companies: CPX SLP FA/ FIPP ECR ETP ORCA
Hybridan
AFC has unveiled a groundbreaking modular ammonia cracker system demonstrating viable and scaleable production of hydrogen in the UK using this method. The cracker system is designed to deliver 140 tonnes of fuel cell grade hydrogen each year. Hydrogen from the plant will initially be targeted for sale into AFC’s UK H-Power Generator deployments, including those with Speedy Hydrogen Solutions. Along with the recent purchase of the mobile storage and distribution assets of Octopus Hydrogen, AFC c
Companies: AFC Energy plc
Sanderson Design Group (SDG) continues to deliver on its key strategic initiatives and growth drivers despite a challenging global backdrop. The group’s FY23 performance showed flat revenue, with adjusted underlying PBT rising £0.1m to £12.6m. Net cash dropped back to £15.4m, with the total dividend maintained at 3.5p. The star performers were Licensing (reported revenue +25%), the Morris & Co brand (+16%) and the US market (+20%). Our forecast revisions assume more modest sales progression, wit
Sanderson Design Group has delivered its full-year trading update to 31 January 2024. Group revenue has eased back 3.1% to £108.5m on a reported basis, following the 2% decline in H1. The strongest performances were delivered by the strategic growth cornerstones of Licensing and North America, offset by challenging market conditions in the UK, Europe and the Rest of the World. A strong balance sheet saw year-end cash rise to £16.2m, compared with £15.4m at year-end FY23. Having traded in line wi
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