Boycotts and value chain disruption put pressure on Puma to perform

German apparel brand Puma has warned that the consumer boycott in China and cost pressures could limit profit growth, despite the expectation of sales growing at least 10% in 2022.

In a conference call after the results, Puma CEO Bjørn Gulden said the consumer boycott of Western sportswear and fashion brands started in China in March 2021. The boycott was in response to multiple brands' statements that they would not use cotton produced in Xinjiang. At that time, human rights groups and some governments claimed that forced labour was used against the ethnic minorities in the region including Uyghurs.

When it came to its financial results, Puma said its sales increased by 31.7% to €6,805.4 million. The strong sales development was driven by double-digit growth rates in all regions and product divisions. In terms of regions, Americas was leading the growth with a sales increase of 53.9% to €2,636.9 million and thereby exceeding for the first time the €2 billion mark. In the EMEA region, almost all countries contributed with double-digit increases to a sales growth of 28.2%. Sales in APAC were up 10.6%, as strong growth in markets such as India, Japan and Oceania more than compensated for the current market environment in Greater China.

The company also offered its brand and strategy update where eight strategic priorities remained unchanged in 2021. It wanted to continue to create brand heat; develop product ranges that are right for the consumers; build a comprehensive offer for women, improve the quality of our distribution; increase the speed and efficiency of our organisational infrastructure; strengthen its positioning in the North American market by leveraging its re-entry into basketball; and put an even stronger focus on local relevance and sustainability.

To further improve its product range, Puma presented a completely new line-up of performance running shoes with our new cushioning technology NITRO, receiving positive reviews from runners and the media, according to the company. Additionally, it continued to strengthen its product offer for women. For example, the "She moves us" brand platform featured top female brand ambassadors, such as Dua Lipa, Cara Delevingne and Nikita Parris, and celebrated inspirational women in culture and sports. It also included a partnership with Women Win, an organisation which organizes sports events for women and girls around the world.

Looking ahead, Puma said despite very strong growth in 2021, the company continues to face a high degree of uncertainty in the global business environment. The company said that 2022 started with an all-time high of COVID-19 cases and consequently, several governments have implemented regional or country-wide restrictions which affected the entire value chain from manufacturing to retail store operations. Political tensions in key markets as well as supply chain constraints due to container shortages and port congestion are also unfortunately continuing in the new year too.

"We will have to continue our hard work in this difficult environment, but I remain very optimistic for the future of both our sector in general and PUMA in particular. Our continued brand momentum, strong demand for our products and very good feedback from our retail partners make me very optimistic," said Gulden.