Nov. 9 (Bloomberg) -- Puma AG, the second-largest European sporting-goods maker, said third-quarter profit fell 24 percent after it cut prices to clear inventory that built up during the recession.

Net income slid to 68 million euros ($102 million), or 4.50 euros a share, from 89 million euros, or 5.81 euros, a year earlier, the Herzogenaurach, Germany-based company said today. Inventory fell 18 percent to 356 million euros.

The shares rose as Puma, which is controlled by Paris-based Gucci owner PPR SA, forecast profitability for the fourth quarter. Chief Executive Officer Jochen Zeitz said he “hopes” business conditions will improve before next year’s soccer World Cup. Sporting-goods makers cut prices as demand declined for branded shoes and jerseys, hurting Puma and larger rival Adidas AG, which last week reported a 30 percent decline in profit.

“The figures are good in view of the current environment,” said Tim Burkhardt, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, Germany. “The inventory reduction has advanced well.” He rates the stock “buy.”

PPR said last month that Puma’s third-quarter revenue declined 5.5 percent to 673 million euros. The sporting-goods maker expects sales for the year to fall by a “low- to mid- single-digit percentage,” adjusted for currency swings, Zeitz said on a conference call today.

Lower Margins

Puma rose 9.94 euros, or 4.5 percent, to 232.94 euros today in Frankfurt trading. PPR owns almost 70 percent of the stock.

Puma’s operating margin, or earnings before interest, taxes, depreciation and amortization as a percentage of sales, narrowed to 14.5 percent from 17.5 percent a year earlier. The same margin at Adidas fell to 11.6 percent from 15.3 percent.

Puma’s smaller exposure to “difficult eastern European markets” is one the reasons why its margins are stronger than those of its competitor, Burkhardt said.

Net income for the quarter missed the 70 million-euro median estimate of six analysts surveyed by Bloomberg.

Third-quarter sales of shoes, which generate almost three- fifths of total revenue, fell 13 percent, Puma said. Sales of clothing, such as replicas of the soccer jerseys Puma supplies to World Cup champion Italy, dropped 3 percent.

Puma, known for its leaping-cat logo, is based in the same Bavarian town as Adidas. The company outfits Jamaican runner Usain Bolt, who set a new 100-meter world record in the quarter. Puma said Bolt’s record has a “media value” of more than 83 million euros, the equivalent amount of money the company would have had to spend for similar exposure from regular advertising.

To contact the reporter on this story: Holger Elfes in Dusseldorf at helfes@bloomberg.net.

Last Updated: November 9, 2009 12:54 EST