German sportswear manufacturer Puma’s net profit for the first quarter of 2020 declined by 61.6 per cent year-on-year, moving from €94.4 million (US$101.9 million) for the same period in 2019 to €36.2 million (US$39.1 million).
The company’s earnings before interest and taxes fell from €142.5 million (US$153.8 million) last year to €71.2 million (US$76.8 million).
“The second quarter will financially be even worse with more than 50 per cent of global sports and sport lifestyle space being closed.”Bjorn Gulden, CEO, Puma
Sales also dipped, fell from €1.32 billion (US$1.42 billion) to €1.3 billion (US$1.4 billion). Nevertheless, revenue from e-commerce rose by around 40 per cent as more consumers shopped online due to lockdown measures implemented as a result of the coronavirus pandemic.
Puma’s chief executive Bjorn Gulden warned that first-quarter results could portend a tough second quarter for the company.
“The first quarter was difficult, but we feel we did a decent job,” he said.
“The second quarter will financially be even worse with more than 50 per cent of global sports and sport lifestyle space being closed,” Gulden added.
The financial results follows of the heels of Puma securing a new revolving credit facility of €900 million (US$971 million) earlier this month.
The company disclosed further that it has proposed to suspend its dividend and noted it could not yet provide a financial outlook for 2020 due to the unpredictable development of the COVID-19 pandemic.
Puma is the second sportswear brand to reveal the impact the current health crisis is having on its financial results. Recently, Adidas shared that it recorded a 97 per cent contraction in its net profit for Q1, posting figures of €20 million (US$21.6 million) compared to €631 million (US$681 million) a year ago.
Adidas cited the closure of more than 70 per cent of its physical outlets as one of the main reasons for the dip in earnings. Notwithstanding, the company witnessed a 55 per cent increase in online sales and a 35 per cent rise for the first quarter overall.