Puma Reports Profit Gain, Raises Annual Forecasts
Puma AG, Europe’s second-largest sporting-goods maker, said third-quarter profit rose 14 percent and raised its 2010 forecasts for sales and profitability.
Net income advanced to 77.6 million euros ($108.4 million), or 5.13 euros a share, the Herzogenaurach, Germany-based company said today. For the year, Puma forecasts sales growth in the “mid-to-high single digits,” having previously predicted “low-to-mid single digits.” The company said it now expects gross profit margins to widen rather than be unchanged.
Chief Executive Officer Jochen Zeitz said the outlook for revenue growth is better in the fourth quarter, without giving a reason. Sales will continue rising at a “high single-digit” pace until 2015 while margins will remain stable, the company said, driven by the Puma brand, the wholesale business, footwear sales and by the Europe, Middle East and Africa region.
Puma rose 4.75 euros, or 1.9 percent, to 255.30 euros at 2:07 p.m. in Frankfurt trading. The shares fell yesterday after Puma said “irregularities” at its Greek joint venture will cause the company to write off as much as 115 million euros, of which about 15 million euros will be charged this year.
Puma today disclosed details of its so-called “back to the attack” program, which aims to boost annual revenue to 4 billion euros by 2015 from 2.46 billion euros last year. As part of that plan, the sporting-goods maker said it will take full control of its Chinese retail joint venture in January by acquiring the 49 percent minority stake. Puma aims to make China its biggest emerging markets country.
Puma will “selectively” consider making acquisitions, though growth will mostly be achieved without them, Zeitz said. The company is able to spend a “triple-digit million” euro amount for acquisitions if it sees opportunities, he added.
Investment in the business will be as much as 100 million euros in 2011 and less than that in future years, Zeitz said. Puma won’t lower prices for its shoes and apparel next year, the CEO also said.
French parent company PPR SA, which holds 71.6 percent of the shares, said Oct. 18 that the sporting-goods maker will become the main brand of a new sports and lifestyle unit. Puma will in April convert into a Societas Europaea, and Chief Executive Officer Jochen Zeitz will become executive chairman.
Third-quarter revenue at the sporting-goods maker rose 17 percent to 784.3 million euros, or 6.5 percent adjusted for currency shifts. The euro traded at an average of $1.29 in the period compared with $1.43 a year earlier. Sales also rose after Puma acquired Fortune Brands Inc.’s Cobra golf brand this year.
Profit missed the 79.3 million-euro average estimate of seven analysts surveyed by Bloomberg.
Puma also predicted an increase in full-year earnings before interest, taxes and one-time items.
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