Puma to Put Profit Ahead of 4 Billion-Euro 2015 Revenue Target

Puma SE, Europe’s second-largest sporting-goods maker, shifted away from its goal to reach 4 billion euros ($5.35 billion) of revenue by 2015 and made improving profit a priority after earnings slid.

Reaching the target within the timescale is no longer a priority, and it remains an “ambitious” aim, Chief Executive Officer Franz Koch said today at a press conference at the company’s Herzogenaurach, Germany headquarters. Puma will continue to implement measures to improve its profitability this year, including eliminating 450 jobs, while sales will be at a similar level to 2012, he said.

“It is not our priority to push for sales growth at any cost, but instead focus on improving desirability for the Puma brand,” said the CEO, who is scheduled to leave at the end of March after only two years in the job. “It will be difficult to reach the 4 billion-euro goal by 2015.”

Puma, which set the revenue target in 2010, said today it expects low-to-mid-single digit earnings growth in 2013. The company is closing stores and cutting product ranges as owner PPR SA seeks to boost the brand’s performance-wear credentials. One-time expenses reached 177.5 million euros last year, exceeding previous guidance of 100 million euros.

“Puma is in a deeper-than-expected restructuring process,” said Volker Bosse, an analyst at Baader Bank AG, who recommends holding the shares. Koch’s comments on sales versus profitability suggest “changing priorities going forward.”

‘Very Volatile’

Puma rose 0.8 percent to 233.45 euros as of 2:07 p.m. in Frankfurt trading, after a drop of as much as 2.8 percent earlier in the day..

Earnings before interest and tax before special items fell 13 percent to 290.7 million euros last year. That beat the 285.6 million-euro average estimate of 13 analysts compiled by Bloomberg. Sales rose 8.7 percent to 3.27 billion euros.

“Top-line and results momentum continue to be very volatile,” said Michael Kuhn, an analyst at Deutsche Bank AG, who recommends holding the stock. The outlook for 2013 “is cautious and somewhat disappointing.”

Puma, which is introducing new products for running, training, fitness and golf, said it will cease making sailing products from 2014. Performance-wear will account for about 60 percent of revenue by 2015, Koch said.

The company expects to operate 540 outlets at the end of 2013, down from 590 at the end of last year.

CEO Sought

A new CEO will be announced in the “coming weeks,” Koch said at a presentation at the company’s headquarters. The sporting-goods maker will be led by Chief Financial Officer Michael Laemmermann and Chief Commercial Officer Stefano Caroti from April 1 until a successor assumes the role, he said.

“It didn’t pan out unfortunately,” Koch said of his departure. “In sporting terms, you would say that it was a foul. But as a sportsman, I know that the best thing to do is just to get back up on your feet again and get going again.”

Sales climbed 12 percent in the fourth quarter, boosted by Asia and North America and the performance of Cobra Puma Golf, the company said. Excluding currency swings, sales climbed 8.7 percent in the period.

Revenue advanced 16 percent in the Asia-Pacific region, 12 percent in the Americas and 7 percent in EMEA, Puma said. All product segments grew in the quarter, led by a 15 percent gain in apparel sales. Accessories sales advanced 12 percent, while footwear gained 8.6 percent, Puma said.

The company also said it will propose a dividend of 0.5 euros a share for 2012 compared with 2 euros a year earlier.