Puma sees sales hit from China backlash and freight delays
German sportswear company Puma (PUMG.DE) expects a consumer backlash against Western brands in China and congestion at ports to hit its sales though it gave an upbeat outlook for 2021 following a strong first quarter.
Brands including Puma and rivals Nike (NKE.N) and Adidas (ADSGn.DE) faced online attacks in China last month over statements about their sourcing of cotton from Xinjiang after reports of human rights abuses against Uyghur Muslims. read more
“We can still see that trend is continuing. There is less activity in the Western brand stores than there would have been if tension wasn’t there,” Puma Chief Executive Bjorn Gulden told reporters.
Before the backlash, Puma’s sales in greater China had been growing strongly, rising 40% in the first quarter.
Western governments and rights groups have accused authorities in the western region of Xinjiang of detaining and torturing Uyghurs in camps. Beijing denies the accusations.
Puma has previously said it has no direct or indirect business relationship with any manufacturer in Xinjiang.
Overall, Puma reported a 26% rise in first-quarter sales to 1.549 billion euros ($1.9 billion) after adjustments for currency fluctuations, while net profit jumped to 109 million euros, both beating average analyst estimates.
Puma’s shares, up two-thirds in the last year, were down 2.9% at 0940 GMT.
It expects full-year sales to increase by a “mid-teens” percentage and significantly better profitability than last year.
Puma is benefiting from people doing more sport as they try to lose weight after coronavirus lockdowns, a trend it hopes will get another boost after the Tokyo Olympics and the European soccer championships, Gulden said.
However, Puma faces problems getting products made in Asia to key markets due to container shortages and port congestion, especially in North America, following COVID-19 outbreaks among dockworkers and safety restrictions…..read more