Puma AG looked to the Americas and the U.S. in particular in the second quarter to maintain its double-digit growth trends as the Europe business cooled once again. The company reported that consolidated net sales grew 12.3% to 395.5 million in Q2 from 352.3 million in the year-ago period. Worldwide branded sales, including consolidated and license sales, totaled 529 million ($668 mm) in Q2, a 14.3% increase on a currency-neutral basis or 13.9% in Euro terms. The licensed business grew a strong 19.1% to 134 million ($169 mm) in Q2. A particularly strong performance in the Asian region contributed to the high double-digit growth. As a consequence, royalty and commission income was up 28.7% to 13.8 million ($17.4 mm) in the second quarter.
Puma has now consolidated Europe, Middle East, & Africa into a new EMEA region, which they said was in line with how the market reports. Still the move came at a good time for Puma as issues in Europe get some cover from a less mature region that saw sales increase nearly 60% in the Q1 period. EMEA region sales for Q2 were 239.7 million in Q2, a slight increase versus 239.2 million in the same period last year last year, but significantly better than the order books at end of Q1. Gross profit margin improved 250 basis points to 54.9% of sales, compared to 52.4% last year. Order backlog at quarter-end was 486 million ($586 mm), a decline of 7.9% compared with last year, which can be attributed to higher than expected sales in Q2 as well as a delayed order income due to Spring/Summer sales meetings in some key countries taking place one month later than last year. Adjusted by these effects, the order book would have decreased about 3% at quarter-end, according to the company.
The Americas reported sales of 108.5 million in Q2 versus 71.8 million in Q2 last year and now accounts for 23% of consolidated sales. The gross profit margin in the region improved by 160 basis points to 50.1% compared with 48.5% last year. Backlog increased significantly and reached 205 million ($247 mm) with a currency-neutral growth of 63.1%, or 66.3% in Euro terms. The U.S. order backlog jumped nearly 61% to $211 million. The Asia/Pacific region increased sales 14.3% in Euro terms to 47.3 million from 41.4 million in the year-ago period. Gross margin improved significantly from 47.3% to 51.7%. Backlog was up 1.6% in Euros to 81 million ($98 mm).
Total company order backlog at quarter-end was up 6.7% to 772 million ($932 mm). By segment, Footwear orders were up 7.4% to 536 million ($647 mm), Apparel orders increased 5.1% to 195 million ($235 mm), and Accessories backlog increased 4.8% to 40 million ($48 mm).
Based on the year-to-date results, and the stronger order book, management raised full-year sales guidance to 10% from the previous mid- to high-single-digit growth forecast. Gross profit margin is also expected to reach the higher end of the guidance between 51% and 52%, or “even possibly above.” SG&A expenses are forecasted slightly above 31% of sales and EBIT margin should be above 20%. Management expects net earnings to come in between 264 million and 274 million translating to a mid- to high-single-digit EPS increase on a like-for-like basis.
| Puma, Inc. | ||||||
| Second Quarter Results | ||||||
| Q2 Group Sales | Backlog Change | |||||
| 2005 | 2004 | Change | Neutral* | Euros | Neutral* | |
| Group Sales | $498.7 | $424.8 | 12.3% | 13.2% | 6.7% | 6.2% |
| EMEA | $302.2 | $288.4 | 0.2% | 5.5% | -7.9% | n/a |
| Americas | $136.8 | $86.6 | 51.1% | 55.1% | 66.3% | 63.1% |
| U.S.** | $109.8 | $77.1 | n/a | 42.4% | n/a | 60.8% |
| Asia/Pacific** | $59.6 | $49.9 | 14.3% | 16.2% | 1.6% | 3.9% |
| Footwear | $334.3 | $276.1 | 15.8% | 16.7% | 7.4% | 6.9% |
| Apparel | $126.3 | $118.9 | 1.6% | 1.7% | 5.1% | 4.6% |
| Accessories | $38.1 | $29.7 | 22.8% | 23.0% | 4.8% | 5.0% |
| Net Income | ||||||
