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 

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Teresa Hartford

Teresa Hartford Editorial & Creative Director | SGB Media teresa@sgbonline.com | 704.651.5741

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