By  on May 8, 2008

PARIS — German sporting goods and apparel retailer Puma AG saw its first-quarter net earnings slide nearly 7 percent due to high marketing and retail investments.

For the three months ended March 31, net earnings at the firm, which is majority-owned by PPR, fell 6.7 percent to 90.1 million euros, or $134.9 million. Dollar figures were converted at average exchange rates for the quarter.

That showing came on consolidated sales that gained 2.7 percent to 673.3 million euros, or $1.01 billion. On a currency-neutral basis, sales rose 6.6 percent.

The activewear firm's gross profit margin reached 53.4 percent, compared with 52.2 percent a year ago.

Puma said its marketing and retail expenses increased 20.6 percent to 120.4 million euros, or $180.3 million.

Sales declines in the Americas slowed overall growth, with business there dropping 14.7 percent to 148.7 million euros, or $222.7 million. In the U.S., sales fell 14.2 percent to 89.6 million euros, or $134.1 million, reflecting an ongoing slowdown in the mall-based business, Puma said. Orders in the U.S. at the end of March had declined 20.8 percent.

Business in the Europe, Middle East and Africa (EMEA) region increased 8.4 percent to 391.1 million euros, or $585.8 million, and orders were up 10.9 percent there.

Revenues in Asia-Pacific increased 10.7 percent to 133.5 million euros, or $200 million, with order books increasing 23.7 percent.

Total orders, used as an indicator of future sales, were up 12 percent on a currency-adjusted basis, to nearly 1.2 billion euros, or $1.79 billion.

On a currency-adjusted basis, sales fell 5.6 percent in North America, while they rose 9.7 percent in the EMEA region and spiked 13.3 percent in Asia-Pacific.

While sales of footwear, Puma's biggest category, were hampered by a slowdown in the U.S., apparel and accessories revenues achieved double-digit gains.

Overall, footwear dipped almost 5 percent year-on-year to 394.2 million euros, or $590.4 million. Apparel sales grew 18.5 percent, to 231.8 million euros, or $347.2 million, while accessories rose 16.5 percent to 47.3 million euros, or $70.8 million.

Chief executive officer Jochen Zeitz said that while the firm has had a challenging start, 2008 continues to be an important year for the brand, with three major growth platforms: June's European soccer championships, where Puma will sponsor five teams; the Summer Olympic Games, for which Puma is sponsoring national teams including Jamaica, Sweden and Morocco, and the Volvo Ocean Race in Alicante, Spain, in October, where Puma has entered a team.Despite a challenging environment, Puma confirmed its full-year forecasts of single-digit sales growth, on currency-neutral terms. Yet, given the year's action-packed sporting calendar, the firm warned its continued marketing investments could impact its 2008 earnings before interest and taxes margin. For the first-quarter, EBIT amounted to 125.8 million euros, or $188.4 million, down 6.7 percent.

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