Puma AG Net Profits Rise in Second Quarter

Activewear firm beats expectations; says orders are up 8.6 percent.

By Damien McGuinness 
BERLIN — German sportswear giant Puma AG, majority owned by PPR, reported an increase in second-quarter net profits on Thursday, thanks to a rise in global sales.

This story first appeared in the August 8, 2008 issue of WWD.  Subscribe Today.

The Herzogenaurach-based company, which is the world’s third-largest sporting goods brand, saw net income rise by 0.9 percent over the second quarter to 45.6 million euros, or $71.1 million. Dollar figures are converted from euros at average exchange rates for the period.

Earnings before interest and taxes were up by 2.1 percent to 62.3 million euros, or $97.2 million. Consolidated sales, meanwhile, increased more than 11 percent currency-adjusted or more than 6 percent in euro terms to 577 million euros, or $900.1 million. Puma said it is pleased with the results, which demonstrate impressive sales growth despite the sluggish consumer environment.

During an analyst conference call on Thursday, chief executive Jochen Zeitz attributed much of Puma’s success to the Olympic Games. The label’s main focus is on track and field and the core category is running. In total, Puma sponsors 16 national teams, including Jamaica, Sweden and Morocco. The European soccer championships, Euro 2008, earlier this year also contributed to brand visibility, with Puma sponsoring five teams. Going forward, Puma will take part in the round-the-world sailing marathon, the Volvo Ocean Race, which sets off from Alicante in October.

All regions contributed to sales growth, but Latin America performed particularly well, and sales in the U.S. market were up significantly compared with the first quarter.

Sales in the Americas as a whole increased by 14 percent currency-neutral to 147 million euros, or $229.3 million. However, sales were negatively affected by the difficult economic environment: Compared with the previous year, sales in this region decreased by 1 percent. Apparel orders in America did improve, with a rise of 15 percent currency-neutral in the first quarter.

Looking forward, Zeitz admitted that overall economic conditions were difficult, but said he was confident Puma will post another year of sales growth in 2008. “The current volatile market environment and low consumer sentiment make it extremely difficult to provide a concrete forecast on 2008 profits, while Puma’s profitability should still remain on a very high level in a competitive comparison,” he said.