Bjørn Gulden Chief Executive Officer PUMA

I hope this letter finds you well despite the current challenges around the world. After more than two years, the COVID-19 pandemic still has a negative impact on our daily lives and business and now we’re also facing a conflict in the heart of Europe that is causing terrible human suffering.

We’re in constant dialogue with all our stakeholders in Ukraine and we do our utmost to support our local employees and their families as well as all our partners, ambassadors, and athletes wherever we can. Ensuring the health and safety of our people continues to be our number one priority, as we have already demonstrated throughout the COVID-19 pandemic. We have set up a safe house in Ukraine, we are delivering food, water, and other necessities directly to our people and we are helping women and children who want to leave the country. We currently have 40 women and children in accommodation in Poland and about 120 here in Germany. Many of the adults have already started working and most of the children are already attending schools and kindergarten. Their positive attitude and mindset, as well as their willingness to work and integrate, is remarkable. They are strong and positive people. I sincerely hope that this conflict will be solved diplomatically as soon as possible, that further bloodshed can be avoided and that peace will be restored.

While we are most concerned about the lives and livelihoods of the people who are directly affected in Ukraine and by the COVID-19 pandemic, the conflict as well as the pandemic also have a significant business impact on our sector and on PUMA. In addition to the impact on our operations in Russia and Ukraine, we continue to face some of the challenges that we already saw during the course of 2021: COVID-19 related lockdowns and restrictions in different parts of the world, a weak consumer sentiment in some key markets, significant challenges in our supply chain, strong inflationary pressures, and geopolitical tensions.

Despite all these challenges, 2021 was a very successful year for us. To be specific, it was the best year in PUMA’s history. Due to our continued brand momentum combined with high operational flexibility and a fantastic effort from our employees, our sales grew by 32% to EUR 6,805m and EBIT grew by 166% to EUR 557m. Compared to the pre-pandemic level of 2019, our sales increased by 30%, resulting in a two-year CAGR of around 15% during these challenging times. Our strategy of working closely together with all our suppliers and retail partners to manage short-term issues without hindering our mid-term momentum continued to pay off. Our external partners supported us in an extraordinary way and the dedication and commitment of all our employees during such a challenging year was truly exceptional. A lot of our employees went far beyond what a company can expect from them and in the name of the entire PUMA Board, I would like to thank everyone for their contribution towards making these results possible. People make the difference and our PUMA family is our biggest strength and asset.

Throughout 2021, we continued to focus on the three main areas that we defined in early 2020 in reaction to the COVID-19 pandemic: Deal with COVID, continue to drive the business and continue to do the right thing in areas such as social responsibility and environmental sustainability.

Dealing with COVID first and foremost meant ensuring the health and safety of our people and everyone in our value chain. We continued to adopt and comply with very strict health and safety measures across our operations and rolled out vaccination programs for our employees in countries where this was possible. This helped us achieve a vaccination rate of more than 90% at our headquarters in Herzogenaurach by mid-July. At the end of the year, we followed up with booster vaccinations. I would once again like to thank our People & Organization teams (formerly known as Human Resources) around the world for successfully managing a second year of COVID-19 and supporting our employees in the best way possible.

Until around the first quarter 2021, the COVID-19 pandemic mainly impacted the store operations of our own retail organization and of our retail partners due to mandatory store closures and other restrictions. This was followed by significant disruptions in our supply chain due to lockdowns and factory closures in key sourcing countries such as Bangladesh, Cambodia, China and Vietnam. Especially, the lockdown in the third quarter in 2021 in the south of Vietnam, one of our most important sourcing destinations, had a very negative impact on our supply chain. Due to strict local lockdown measures, the production at our footwear, apparel and accessories suppliers in the south of Vietnam was suspended for about ten weeks, affecting approximately 15% of our global sourcing volumes. We tried to minimize delays as much as possible and shifted part of the volumes to other sourcing locations where possible. Thanks to the quick rollout of the vaccination program in the south of Vietnam, the factories gradually reopened during October and ramped up to full production by the end of year. After our suppliers resumed normal operations, we saw fewer and very localized factory closures in some parts of Asia, which did not significantly impact our product supply. We’re very thankful to our suppliers for being a part of the PUMA family. The strong collaboration, long-term partnership and all their incredible support ensured the continued supply of products under very difficult circumstances.

The COVID-19 pandemic also had a major impact on other parts of our supply chain, and we had to deal with capacity constraints, container shortages and harbor congestion in ocean freight, but also significant challenges in air freight and land-based transportation. All these constraints led to a strong increase in freight costs, which further fueled inflationary pressures, in addition to rising costs for energy, raw materials and labor.

As manifested in our strong sales growth, we also continued to drive the business in 2021. After the end of the COVID-19 related lockdowns, we witnessed a certain “normalization” of buying patterns, with more consumers shopping offline again instead of online. In our Direct-to-Consumer business, we therefore saw a higher growth rate in our brick & mortar stores compared to our eCommerce sites. However, both channels grew by double-digits last year, and we continued to invest in the optimization of our store portfolio, the consumer experience on our existing sites as well as the launch of new eCommerce sites. During a time of limited supply, we continued to prioritize our retail partners in terms of product allocation. We strongly believe in a multi-brand retail environment and will therefore strengthen the relationship with all our retail partners around the world and do everything we can to service them in the best way possible.

After a year without any major sporting events in 2020, we were also excited to see sports leagues, tournaments and other competitions resume in the course of 2021, for the most part including live spectators.

The summer of 2021 was exceptional for our teams and athletes, who delivered world class performances on track and on the pitch. We underlined our credibility and high ambitions in football with the victory of the PUMA-sponsored national team Italy at UEFA Euro 2020, several league and cup titles of our PUMA-sponsored club teams and great on-pitch visibility of our products. At the Tokyo Olympics and Paralympics, our athletes won more than 70 medals, demonstrating the performance credentials of our products on the world stage, including our new NITRO running shoes that I personally am exceptionally proud of. We also continued our successful re-entry into basketball, especially for the North American market and launched our first signature shoe with LaMelo Ball at the end of the year. The strengthening of our performance credibility has always been important to us and I’m very happy about the great progress that we’ve seen across football, running, fitness, golf, motorsport, basketball and other locally relevant sports. In Sportstyle, we also continued to build brand heat through exciting new products and collaborations and by offering a comprehensive collection across all relevant price points, including a strong focus on comfort. We are very happy to see that our classics business is growing strongly. Our PUMA Archive is full of footwear and apparel from the 70s, 80s and 90s, for which there is currently a lot of demand in youth culture. We’re also very satisfied to see the continued momentum in our women’s business, following the launch of our “She Moves Us” brand platform, and we will keep capitalizing on our truly inclusive product offering across genders, age groups etc.!

We also continued to focus on what we call “Doing the right thing”. We want to be a good corporate citizen and embed our social responsibility and our environmental sustainability into all our business practices. With regards to social responsibility, we continued with multiple initiatives under our #REFORM platform to promote universal equality. We strongly believe that people should be treated equally irrespective of their gender, age, skin color, religious believes, sexual orientation or any other factor. Together with our brand ambassadors and partner organizations, we want to do our part to promote universal equality and fight any form of discrimination in sports and society as a whole. As part of our ambitious 10FOR25 sustainability targets, we implemented more sustainable business practices in all our business operations from sourcing to retail and further increased the usage of more sustainable materials and the overall share of more sustainable products in our collections. We also increased our focus on circularity, with several pilot projects and strengthened our consumer-facing sustainability communication through our FOREVER BETTER brand platform. I, together with my team, attended the COP26 climate conference in Glasgow to emphasize our commitment in the fight against climate change and to work towards limiting the global temperature rise to 1.5 degrees Celsius above pre-industrial levels. We have all these initiatives because we really believe in them, as part of PUMA’s core values, and we will continue to do the right thing.

Given our strong performance in 2021 and good momentum in the first months of 2022, we’re also optimistic for the future of our industry in general and for PUMA in particular, despite the external challenges. The underlying dynamics in our sector remain very strong given the increasing participation in sports, the ongoing sneaker trend and the continued casualization among consumers all around the world. We also see PUMA’s brand momentum continuing and we will ensure operational flexibility in an increasingly volatile and unpredictable marketplace. As we have already done during the past years, we will continue to work very closely with all our retail partners to further increase our shelf space and support the sell-through of our products in their stores. We have focused on building strong partnerships with all our key stakeholders such as suppliers, retailers, ambassadors and athletes, helping them as well as us through the ongoing challenges. We will continue to foster these partnerships in the future. We therefore expect 2022 to be another record year for PUMA, with a net sales growth of at least 10%, with upside potential, and an EBIT of EUR 600 – 700 million. The objective is not to maximize short-term EBIT, but to continue to have healthy long-term growth in both sales and EBIT. We will also keep on putting our people first and take care of all our partners.

Let’s stay positive and hope that peace in Ukraine will be restored as soon as possible and that the impact of the COVID-19 pandemic will continue to decrease.

Thank you for being part of the PUMA family!

Stay strong, healthy and optimistic!