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Apparel Helps Puma See 43.5% Profit Rise

PARIS — Puma AG on Monday said strong footwear and apparel sales drove full-year profits up 43.5 percent, outpacing analysts’ expectations as well as its own earnings targets for 35 to 40 percent growth.<BR><BR>But the German sporting...

PARIS — Puma AG on Monday said strong footwear and apparel sales drove full-year profits up 43.5 percent, outpacing analysts’ expectations as well as its own earnings targets for 35 to 40 percent growth.

But the German sporting goods firm said its recent track record for double-digit sales gains could decelerate in 2005 as the brand matures in key markets amid a softening economic environment.

Puma said profits for the year ended Dec. 31, 2004 increased to 257.3 million euros, or $334.5 million at current exchange, on sales of 1.53 billion euros, or $1.99 billion.

Fourth-quarter consolidated sales grew 20 percent to 273 million euros, or $354.9 million, lifted by a 25.2 percent rise in footwear sales and an 11.4 percent gain in apparel, Puma said. Net earnings in the quarter improved 48 percent to 37 million euros, or $48.1 million.

Puma chief executive Jochen Zeitz called the results “a strong ending to another positive year in which we have established new benchmarks in sales and profitability.”

But he warned that Puma’s impressive expansion rate could slow this year as the brand reaches a new phase in its development and consumer spending stagnates in key European markets such as Germany, France and the United Kingdom.

Zeitz predicted consolidated sales would “show mid- to high-single-digit growth on a currency-neutral basis.”

This would be Puma’s slowest pace of growth in over five years, since the company began revamping its image with more savvy marketing and fashion-forward products.

But a spokesman for the company insisted the guidance was “solid” and based on “strong” order backlogs through December.

He said Zeitz would present a new five-year development plan later in 2005.

By region, sales grew 17.6 percent to 1 billion euros, or $1.3 billion, in Europe, boosted by a 26.6 percent gain in apparel sales and a 14.8 percent rise in sales of shoes. In the Americas, where figures were hurt by adverse currency exchange rates, sales rose 18.7 percent to 303 million euros, or $393.9 million. They increased 29.6 percent before currency translations. Sales in Asia bounded 28.1 percent to 138 million euros, or $179.4 million, while sales in Africa and the Middle East rose 52.6 percent to 45 million euros, or $58.5 million.