Puma Hikes FY10 Guidance After Stronger-Than-Expected First Quarter

 

Earlier in the year, the company said sales on a currency-adjusted basis would at least match last year’s level. In 2009, Puma sales fell 3.7% to €2.46 billion on a currency-neutral basis.

 

We had a good start into the new year from a bottom line perspective which highlights the effectiveness of our comprehensive restructuring & reengineering efforts,” said Jochen Zeitz, CEO. “Assuming a continuous improvement of the economic outlook and a planned increase of supplier orders, we anticipate low- to mid-single digit growth for the full year, while net earnings should jump significantly to complete the expected earnings rebound. We are now looking forward to the upcoming World Cup and to a successful integration of our newly acquired Cobra Golf business.

 

In the first quarter worldwide Puma brand sales, which include consolidated and license sales, decreased by 2.3% to €720.6 million ($998 mm).  Global brand Footwear sales were down by 6.0% to €382.8 million ($532 mm) and Accessories declined 3.1% to €90.3 million ($126 mm). Apparel sales increased by 4.3% to €247.5 million ($344 mm.)

 

Puma’s consolidated sales slid 2.7% currency-neutral and 2.1% in euro terms to €683.1 million ($946 million). The company noted that the decline partly reflects the fact that last year’s sales increase of 3.6% was mainly driven by closeout sales. In addition, supplier orders for the first half of 2010 were placed with caution. Excluding the previous year’s inventory clearance, sales were slightly above last year.

 

Sales in Footwear declined 4.6% to €378.8 million ($526 mm), or 5.1% currency-neutral and Accessories decreased by 0.5% to €77.5 million ($108 mm), or a 1.6% decline in c-n terms. Apparel sales rose by 2.0% to €226.8 million ($315 mm), or 1.2% currency-neutral, due to gains in PUMA’s team business.

 

Regionally, sales in EMEA were down 6.2% in currency-neutral terms to €351.8 million ($487 mm) and Asia/Pacific fell 8.4% in currency-neutral terms to €141.0 million ($196 mm). The 9.8% currency-neutral gain in the Americas region to €190.4 million ($264 mm) reflected improvement in both North America and Latin America.

 

Gross margins improved to 52.2% of net sales versus 52.1% last year. The Footwear segment reported gross margins of 50.7% of sales versus 50.4%; Apparel, 53.5% versus 53.7%; and Accessories remained unchanged to last year at 55.6% of sales.

 

Regionally, gross margins in EMEA softened to 54.3% of sales from 55.1%, Americas rose to 47.4% of sales from 46.7% – driven by Latin America – and Asia/Pacific improved to 53.4% of sales from 51.0% last year.

 

Operating expenses decreased by 4.6% from €254.1 million to €242.3 million ($336 million.) As a percentage of sales, the cost ratio improved from 36.4% last year to 35.5% because of the cost reduction program introduced last year. Expenses in marketing/retail and depreciation decreased due to the improvement to the overall retail store portfolio.

 

PUMA’s EBIT before special items increased by 4.4% to €119.0 million ($196.8 mm) versus €114.0 million last year.

 

EBIT in EMEA eased 1.2% to €58.6 million ($81 mm) and Asia/Pacific EBIT was down 29.5% to €9.3 million ($13 mm) while EBIT in the Americas surged 96.6% to €22.6 million ($31 million).

 

Net earnings increased to €83.1 million ($116 million), up from €5.6 million in Q1 last year.

 

Inventories declined by 15.9% to €375.7 million ($506 mm) and accounts receivable went up by 10.0% to €568.6 million ($789 mm).

Total cash at the end of March jumped 59.5% to €426.8 million ($574 mm) from €267.6 million at the and of Q1 last year. Bank debts were reduced by 41.8% from €63.2 million to €36.8 million. As a result, the net cash position improved significantly by 90.7% from €204.5 million to €390.0 million.