Puma Cuts Full-Year Earnings Forecast on Impairment Charges
Puma SE (PUM), Europe’s second-largest sporting-goods maker, lowered its full-year profit forecast, saying it will book one-time charges of about 130 million euros ($174 million) this quarter.
The costs relate to the closing of a product development center in Vietnam and the transfer of international product teams to Herzogenaurach, Germany, where the company is based, from London, Puma said in a statement today.
Earnings for the year will be positive “but significantly below those of 2012,” said Puma, which is known for its leaping cat logo. Previously, the crosstown rival Adidas AG (ADS) forecast rising profit. Puma, which is closing stores, eliminating jobs and cutting product ranges to combat declining footwear sales, also reported third-quarter earnings that missed estimates.
“Puma is still in a difficult transformation process,” said Volker Bosse, an analyst at Baader Bank. The shares are being supported by speculation that controlling shareholder Kering (KER) SA may seek a full takeover, he said.
Third-quarter earnings before interest, tax and special items fell to 80 million euros from 99 million euros a year earlier, trailing estimates of about 81.5 million euros, Puma said in a separate statement. A 1.4 percent decline in currency adjusted sales was in line with full-year guidance, it said.
The maker of $90 Ferrari Drift Cat 5 sneakers also confirmed that it expects a low to-mid-single percentage drop in currency adjusted full-year sales.
“We know that our business is currently in a difficult position,” Puma Chief Executive Officer Bjoern Gulden said in a separate statement. “Although it will take some time, we will turn this business around and make the cat shine again.”
Puma’s performance in the quarter was hampered by currency fluctuations, particularly the weakness of the Japanese yen, Kering, which also owns the Gucci brand, said at the time.
Kering owns about 84 percent of Puma, its Chief Financial Officer Jean-Marc Duplaix said in October. The French company has been buying Puma shares “in an opportunistic way” when they’re available on the market, he said at the time.
Adidas, which like Puma was started by brothers Rudiand Adi Dassler in the Bavarian town of Herzogenaurach, yesterday reported a bigger gain in third-quarter profitability than analysts had estimated and said the build-up to the 2014 World Cup in Brazil will start boosting revenue this quarter.
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