Puma AG reported that first quarter consolidated sales grew 7.4% currency neutral (2.0% in Euro terms) to 655.8 million ($859 mm) from 642.8 million ($773 mm) in Q1 2006. Sales in Footwear were up 9.0% to 413.5 million ($542 mm), Apparel by 4.8% to 200.7 million ($263 mm) and Accessories by 4.7% to 41.7 million ($55 mm).
Net earnings grew 3.7% for the period to 96.6 million ($127 mm), compared to 93.1 million ($112 mm) in Q1 last year. Diluted earnings per share were 6.01 in Q1 compared with 5.78 in the year-ago quarter.
PUMAs worldwide branded sales, which include consolidated and license sales, rose currency neutral 8.9% (3.5% in Euro terms) to 762.1 million ($999 mm). The licensed business increased by 15.2% currency neutral (13.3% in Euro terms) to 106.3 million ($139 mm). The company realized a royalty and commission income of 9.7 million ($12.7 mm) in the first quarter versus 8.5 million ($10.2 mm)in the prior year, an increase of 14.0%.
The gross profit margin reached 52.2% compared to 52.4% last year. The Footwear margin was slightly up from 52.0% to 52.1% and Accessories increased from 53.4% to 54.9%. Apparel reported 51.9% compared to 52.9% last year.
Sales in the EMEA region increased currency adjusted 8.0% reaching 360.9 million ($473 mm) versus 339.3 million ($408 mm) last year, representing 55.0% of consolidated sales compared to 52.8% in Q1 last year. Gross profit margin reached 53.7% compared to 55.2% last year. Orders in the EMEA region were slightly up 0.8% currency adjusted, which represents a decline in Euro terms of -0.8%, to 595.3 million ($794 mm).
Sales in the Americas were up currency neutral 4.5% to 174.3 million ($228 mm). The region now accounts for 26.6% of sales, compared to 28.3% of sales in the year-ago period. Gross margins increased from 47.5% to 49.7%. The order volume decreased 8.6% currency adjusted to 260.6 million ($348 mm).
First quarter sales in the U.S. were roughly flat to last year at $156.2 million, compared to $156.6 million in the year-ago period, but the order backlog at quarter-end declined 17.6%, which Puma said is “mainly due to a business related adjustment with one key account that had seen a significant sales increase in the prior years, as well as a generally moderating environment in the U.S. mall business.”
The Asia/Pacific region showed a currency neutral sales increase of 8.6% to 120.6 million ($158 mm) with a strong double-digit increase in China. The total region accounts for 18.4% of sales versus 18.9% last year. The gross profit margin was down from 51.9% to 51.4%. End of March orders on hand were up currency-adjusted by 20.0% totaling 206.9 million ($276 mm).
Total consolidated futures backlog was up 1.4% currency-adjusted to 1.06 billion ($1.42 bn). In terms of product segments, Footwear decreased by 4.5% to 654.5 million ($873 mm), while Apparel was up 15.4% to 343.2 million ($458 mm) and Accessories 0.1% to 65.1 million ($87 mm).
Due to the order situation end of Q1, Puma management said they now expect sales and earnings growth in the low single-digits for the full year. Gross profit margin should range between 50% and 51% of sales. Due to already announced and expected investments in relation to the Volvo Ocean Race participation as well as other planned SG&A initiatives, total cost ratio is expected to be around or above 35% of sales. EBIT should therefore develop in line with sales while the tax rate should come in at last years level.
“Were pleased to have started Q1 with continued growth despite difficult year-on-year comps,” said Jochen Zeitz, Puma CEO. “While the remainder of the off-year in terms of major sports events will certainly be challenging given our current order book, we continue to be fully focused on our long-term objectives.”
