NEW YORK — Hefty double-digit gains in apparel and footwear, and the beneficial effect of the takeover of its Japanese operation, helped Puma AG more than double its second-quarter profits.
This story first appeared in the August 1, 2003 issue of WWD. Subscribe Today.
In the three months ending June 30, net income skyrocketed 123.7 percent to $41.6 million, or $2.54 a diluted share, from $18.6 million, or $1.17, in the year-ago quarter. Dollar figures have been converted at current exchange, as Puma reported net income of 37 million euros versus 16.5 million euros last year.
The Herzogenaurach, Germany-based firm said that second-quarter sales rose 46.1 percent to $338.2 million, or 300.9 million euros, from $231.5 million, or 205.9 million euros, in last year’s quarter. Excluding currency fluctuation’s effects, sales were up 56.8 percent.
Apparel recorded the strongest gains in the quarter, growing 63.4 percent to $87.8 million, or 78.1 million euros. Footwear, the largest segment of the business, managed a 41.2 percent spike in sales, to $227.2 million, or 202.1 million euros, and accessories expanded 37.7 percent to $23.3 million, or 20.7 million euros. Excluding both the Japanese takeover and currency fluctuation, sales rose 42.4 percent.
In a statement, Jochen Zeitz, chief executive, commented, “While we are pleased with our results, we are committed to the constant improvement of our product offerings and strict adherence to our brand strategy. We remain focused on leveraging our positive momentum in order to make Puma the most desirable sport lifestyle brand.”
Puma upped its earnings and sales estimates for the year as a result of the strong second-quarter showing. Pretax profit is now expected to exceed $224.8 million, or 200 million euros, for the first time, with gross margin hitting between 17 and 18 percent of sales. Earnings per share should expand more than 60 percent versus the 50 percent forecast previously issued.
Alden Sheets, president of international apparel for the firm, said in a phone interview that Puma’s fitness line has been key to boosting business. “It demonstrates a perfect transition from sport to lifestyle worn not necessarily in the gym,” he said. Along with U.S. consumers, those in France and Italy are also helping Puma’s apparel sales since “they really understand the balance between sports and lifestyle in apparel.”
In the first half, net income rose 122.4 percent to $96.5 million, or $5.94 a diluted share, from $43.4 million, or $2.81, in the first half of 2002.