Sports Business : After Adidas, Puma profits nosedives

German sportswear manufacturer Puma has seen its net profit for the first quarter of 2020 fall to US$39.1 million, a 61.6 per cent year-on-year drop from US$101.9 million for the same period in 2019.

But more worrisome is guidance by Puma management as they have declared that they expect its second-quarter results to be worse than the first, after it reported that first-quarter sales fell 1.3%, better than analysts had feared.

“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.”

First-quarter sales came in at $1.40 billion, while operating earnings fell 50% to 71.2 million, compared to average 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 its German rival Adidas , which reported last month that first-quarter sales tumbled 19% and also warned of a worse second quarter.

Puma Earnings before interest and taxes were down from US$153.8 million to US$76.8 million compared to last year.

Sales fell to US$1.4 billion from US$1.42 billion. Ecommerce sales, however, did rise by around 40 per cent as more consumers shopped online due to lockdown measures implemented as a result of the coronavirus pandemic.

Q2 could also make grim reading for Puma, whose chief executive Bjorn Gulden warned of a tough second quarter for the company.

Puma is the second sportswear brand in just over a week to reveal the impact the current health crisis is having on its earnings. Adidas saw its net profit for Q1 fall by 97 per cent, posting figures of US$21.6 million compared to US$681 million a year ago.