Puma Quarterly Profit Slides as Turnaround Remains Elusive

Puma SE (PUM), Europe’s second-largest sporting-goods maker, reported a 25 percent decline in first-quarter profit, underscoring the scale of the challenge facing Chief Executive Officer Bjoern Gulden to achieve a turnaround.

Earnings before interest and taxes fell to 59 million euros ($80.9 million) from 79 million euros in the same period a year ago, Herzogenaurach, Germany-based Puma said today in a statement. Analysts predicted 58.8 million euros, according to the average of eight estimates compiled by Bloomberg.

Puma, which repeated its forecast for unchanged annual revenue, is seeking to speed up decision-making and boost its performance-wear credentials as it grapples for market share with larger rivals Nike Inc. and Adidas AG. (ADS) Currency volatility may negatively impact 2014 Ebit margin by about 50 basis points, the maker of evoPower soccer cleats also said.

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While Ebit was slightly better than estimates, Puma’s 60 basis-point decline in gross profit margin “highlights the structural dilutive impact of transitioning the product offer away from lifestyle back to performance,” said John Guy, an analyst at Berenberg, in a note to clients today. He recommends selling the stock.

Puma shares fell as much as 2.3 percent to 210.15 euros and traded at 215.85 at 9:14 a.m. in Frankfurt.

‘Take Time’

“The repositioning of Puma and the turnaround of the business will take time, but I am convinced that we are progressing well on all our key strategic priorities and that we have initiated the right projects to make 2014 the start of the turnaround,” Gulden said in the statement.

Puma, which has been restructuring since 2009, will launch a new unified e-commerce site in the U.S., Europe and Russia by mid-2014, while its new retail format will kick off with a full-price store in Dubai in the fourth quarter, the company said.

Controlling shareholder Kering SA (KER) said last month it won’t acquire more sports and lifestyle businesses until it has turned around Puma. Kering, which owns about 84 percent of Puma, expects to see first benefits of Puma’s 70 million-euro marketing campaign in September, it said at the time.

Puma will sponsor eight teams at next month’s soccer World Cup in Brazil. Cross-town rival Adidas, which will also supply uniforms to eight teams as well as the official tournament match ball, forecast in March that sales will rise at a high single-digit rate this year.

To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net John Bowker

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