Footwear Insight

12 • Footwear Insight ~ May/June 2019 footwearinsight.com Puma Hits Q1 High Puma is holding its 2019 outlook steady at "significant" profit improvement and currency-adjusted sales growth of approxi- mately 10 percent after strong Q1 results. Puma reported its highest quarterly rev- enues ever in Q1, the equivalent of $1.47 billion, and "highest absolute EBIT" as net profit rose 40 percent in euros to the equiva- lent of $105.2 million. CEO Bjorn Gulden said the brand's U.S. basketball sales were a "little above expectations" in Q1, creating noise around the brand, especially in cities where Puma has NBA endorsers. The company will launch the basketball category in other mar- kets in Q3, with a focus on China, where the sport's world championships will take place. Meanwhile, Puma ended Q1 with 19 percent inventory growth, which was related to the company buying more capacity in apparel to avoid supply issues in Q2 and Q3. "We won't lose any sales due to lack of capacity or inventory," said Gulden, adding all the brand's categories were in the "green" in the better-than-expected Q1. In footwear in particular, he said the "chunky" trend remains strong and should continue into 2020, but that the brand's pipeline of low-profile styles is ready to be "dialed up" when needed. Columbia Posts Strong Q1 Results, Sees Potential in Footwear Columbia Sportswear, forecasting 6.5 to 8.5 percent sales growth in 2019, is anticipating its fastest U.S. growth in the footwear segment and is preparing a mar- keting blitz in the cities of Denver and New York between Q3 and Q4 to spark sales and brand awareness. Global sales rose 8 percent to $654.6 mil- lion, with Columbia brand sales 9 percent higher at $552.2 million and gross margin up 210 basis points to 51.4 percent. U.S. sales were 14 percent higher at $412.2 mil- lion; Sorel sales rose 28 percent to $39.5 million; prAna sales slipped 3 percent to $41.2 million; and Mountain Hardwear revenues dipped 11 percent to $21.7 mil- lion. Elsewhere, footwear sales climbed 10 percent higher to $128.6 million as direct- to-consumer revenues rose 12 percent to $291.4 million and wholesale revenues inched 4 percent higher to $363.2 million. "We believe there's a tremendous amount of growth left in the U.S. market," said CEO Tim Boyle. "There's room for us to grow in almost every retailer we sell to." Asics N.A. Reports Q1 Loss Despite Higher Sales Thanks to a better performance running performance, Asics North America reported a 4.2 percent increase in Q1 revenues to the equivalent of $180.3 million. While North America and Japan reported higher performance running sales in Q1, the category suffered an overall 7.7 percent sales decline to the equivalent of $392.9 mil- lion due to weak sales in Europe and Greater China. Overall, parent Asics Corp. reported a 28 percent decline in Q1 operating income to approximately $56.2 million as total period sales declined 5.7 percent to $896.5 million. Skechers Sees International, DTC Fueling FY19 Growth Coming off a Q1 where its U.S. business declined 6.3 percent, dragged down by a 10.9 percent drop in wholesale revenues, Skechers' senior executives forecast mid- teen and mid-single digit topline growth respectively for its international and direct-to-consumer segments in Q2 and in FY19. The company experienced 3.3 percent improvement in its domestic DTC business in Q1. Overall, Skechers reported Q1 revenues of $1.28 billion, up 2.1 percent year-over- year as international sales rose 9.3 percent (15 percent on a constant currency basis). "International continues to be the bright spot, both from a growth perspective and the opportunities we have to grow our brand and to expand our reach beyond the current 57.8 percent of total sales," COO David Weinberg told analysts last week. Countries such as China, India and Mexico are seen as big growth markets for the brand. At the end of Q1, Skechers had 900 freestanding stores in China and 2,399 points of sale in the market as it posted a 32 percent gain in online sales for the market. Skechers recently converted its India operation to a subsidiary, adding an e-commerce component and increasing its own door count to 61 as it tightens its focus on the market of 1.3 billion. Closer to the U.S., Skechers is currently operat- ing 70 stores in Mexico, where the brand's market share is forecast to grow signifi- cantly in coming years. Wolverine's Mixed Results At Wolverine Worldwide, total Q1 revenues slipped less than 1 percent to $523.4 mil- lion as the period operating margin fell to 10.0 percent from 12.0 percent. There were mixed results from the company's portfo- lio of brands and a slow start for seasonal footwear sales. Own ecommerce sales were up 28 percent in Q1 to represent nearly 10 percent of WWW's global rev- enues. The company's Wolverine Michigan Group, a merger of the former Outdoor & Lifestyle and Heritage segments, Q1 revenues grew nearly 3.7 percent on a constant-currency basis. Merrell reported better-than-expected results, including 30+ percent growth in ecommerce and a mid- single digit in own same store sales. Cat brand sales, meanwhile, grew more than 30 percent Q1, but period sales fell in Hush Puppies, Chaco and Bates. Over at the Wolverine Boston Group, led by Richie Woodworth, Saucony brand sales exceeded plan but fell at a mid-teens rate in Q1. Overall Boston Group revenues fell 5.7 percent in constant currency with Sperry, hurt by soft boat shoe sell throughs, down more than 10 percent and Keds' sales up more than 20 percent. Saucony's softness was primarily related to its core technical running segment in the U.S. Sperry enjoyed double-digit sales growth in both casual footwear styles and the lifestyle boot category. l THE FOOTWEAR EYE # E A R N I N G S

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