PUMAs third quarter showed another outstanding performance with growth in consolidated sales of 16.5% on a currency-neutral basis, or by 14.6% to 461 million ($564 mm) in Euro currency.
In currency-neutral terms, Footwear sales grew by 13.9% to 301 million ($368 mm), Apparel increased 19.3% to 130 million ($159 mm) and Accessories were up 27.1% to 31 million ($37.5 mm). In Euro terms Footwear sales were up 12.4%, Apparel grew 17.6% and Accessories were up 25.1%.
PUMAs global branded sales, which include consolidated and licensee sales, totaled 590 million ($722 mm) during Q3, a like-for-like increase of 17.2% (in Euro terms 15.2%) over last year. Licensed sales contributed with an increase of 19.7% (17.3% in Euro terms) to global sales.
Gross margin hit a new high in Q3, coming in at of 52.8% of sales, compared to 50.4% in last years third quarter. This reflects an increase of 240 basis points year over year, resulting from a favorable product mix as well as the strong Euro. All product categories as well as all regions contributed to this strong result.
The accumulated gross profit margin increased 300 basis points from 48.9% to 51.9%. The Footwear margin climbed from 49.7% to 53.2%, Apparel from 47.2% to 49.3% and Accessories from 47.1% to 48.7%.
Total SG&A expenses increased in Q3 from 104 million ($117.5 mm) to 127 million ($155 mm). Marketing/Retail expenditures for the first nine months were up 22.8% to 157 million or 12.5% of sales compared to 128 million or 12.2% in the previous year. Expenses for product development and design increased by 17.7% to 27 million and account for 2.1% on sales versus 2.2% last year. Other selling, general and administrative expenses declined from 14.3% to 13.6% on sales and totaled 171 million versus 149 million.
EBIT increased by 17.9% to 122 million ($150 mm) in Q3, resulting in an EBIT margin improvement from 25.8% to 26.5%. Therefore, net earnings rose by 23.2% to 85 million ($104 mm) in Q3, or 5.21 ($6.48) per diluted share, compared to earnings of 69 million ($77.7 mm), or 4.33 ($4.88) per diluted share in the year-ago period. Return on sales was 18.4% of net sales.
Sales in Europe were up by 11.1% to 314 million ($383 mm) in the third quarter. The Americas reported acceleration in currency neutral sales in Q3 of 26.8%. In Euro currency, sales increased by 17.9% to 84 million ($103 mm). Asia/Pacific region reported sales of 48 million ($59 mm) in Q3 compared to 42 million ($47 mm) last year. In the Africa/Middle East region consolidated sales improved by 110.7% to 15 million ($19 mm) in Q3. Overall, the region contributed 2.8% to consolidated sales.
Order Backlog
Total future orders at the end of the quarter increased by a favorable 19% on a currency-neutral basis. In Euro terms, total orders were up by 17.2% to 757 million ($933.5 mm), which is the 35th consecutive quarter of order growth. The order volume is comprised mainly of deliveries scheduled for the next 2 quarters.
Outlook
As a result of the Groups performance during the first nine months, management confirms top-line growth expectations of around 20% for FY 2004, and increases gross profit margin guidance provided earlier this year (between 50% and 51%) to above 51%. Total SG&A is expected at around 29% of sales, or slightly above. This should lead to an operating margin clearly above 20%. Net earnings for the full year are now expected to grow between 35% and 40%, which would reflect a further increase versus the previous estimate of above 30%. For the sixth consecutive year, earnings growth should once again outpace companys growth in sales.
Jochen Zeitz, CEO: “Once again, we can be nothing but pleased with our overall financial performance. In both mature and developing markets we continued to achieve significant growth in top and bottom lines. Additionally, we expect a strong finish in the 4th quarter which should enable us to once again achieve new records across the board in the full year.”
For a full report on PUMA's third quarter results, including cateogry sales and backlog by region, look for this week's issue of Sports Executive Weekly.
