Puma AG posted flat consolidated net sales growth in second quarter on a currency-adjusted basis, but rose 4.1% to 600.3 million ($818 mm) when measured in the reported euro terms.
On a currency-neutral basis, Footwear was down 2.0% reaching 330.0 million ($449 mm), and Apparel decreased 5.7% to 203.8 million ($278 mm). Accessories sales jumped 41.2% to 66.4 million ($90 mm), which is mainly due to first time consolidations.
Total worldwide sales under the PUMA brand, which include consolidated and license sales, inched up 1.2% to 636.5 million ($867 mm) during the 2009 second quarter, reflecting a currency-adjusted decrease of 2.6% for the period. The licensed business decreased in the second quarter by 30.5% (32.2% currency-adjusted) to 36.2 million ($49 mm) for the quarter. Based on licensed sales, Puma saw royalty and commission income of 5.2 million in the second quarter versus 6.4 million in the previous years quarter, due to the move of more distributor business in-house.
Sales in the EMEA region reached 288.3 million ($393 mm) in the second quarter, a currency-adjusted decrease of 1.4%. Gross profit margin was at a strong 51.5% compared to 54.1% last year. Second quarter sales in the Americas were up 6.9% currency-adjusted, to 168.6 million ($230 mm). The region accounted for 28.1% of consolidated sales in Q2 compared to 25.4% in Q2 last year. Gross profit margin stood at 47.6%, flat to Q2 last year. In the U.S. market, sales increased 4.8% in U.S. dollar terms to $132.7 million in the second quarter. Sales in the Asia/Pacific region decreased in the second quarter by 4.5% currency-adjusted to 143.4 million ($195 mm). The total region accounted for 23.9% of sales. Gross profit margin reached 49.9% of sales in the second quarter versus 54.2% in Q2 last year.
Puma said in a release the overall market environment paired with a change in the regional sales mix resulted in a 250 basis point decline in gross margin to 50.0% of net sales from last years 52.5% of net sales. Footwear margins shrank 460 basis points in the quarter to 48.7% of sales, while apparel margins narrowed 80 basis points to 50.7%, offset a bit by accessories margins, which expanded 370 basis points to 54.2% of sales from 50.5% of sales in Q2 last year.
Puma operating profit declined 9.2% in euro terms to 63.1 million ($86 mm) in the second quarter versus 62.3 million ($109 mm) last year. As a percentage of sales this relates to a margin of 10.5% compared to 10.8% in the prior year period.
The companys pre-tax profit was 61.0 million ($83 mm) in the second quarter versus 62.4 million ($98 mm) last year. Net income totaled 38.5 million ($52 mm) versus 45.6 million ($71 mm) in Q2 2008, a decline of 15.6% year-on-year. EPS was 2.55 ($3.47) compared to 2.98 ($4.66) in the year-ago quarter.
The company went on to say that a solid first half performance and a pro-active restructuring and reengineering program, which has achieved improvements in operating expenses, working capital and free cash flow, have enabled Puma to protect its industry leading key-financial parameters. Further improvements are expected to be realized over the next 18 months as the program continues to yield additional efficiencies and cost savings. However, management said they remain highly cautious and anticipate a continued challenging and volatile retail industry due to the decline of private consumption as a result of the weakness in the global economy, which may negatively impact sales in second half.
