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Puma Lowers Outlook for 2013

The company now expects a low- to mid- single-digit decline in full-year sales.

Puma's neon bright athletic socks.

BERLIN — In the wake of falling first-quarter profits and sales, and ongoing economic uncertainty, Puma has downwardly revised its outlook for 2013.

The German activewear firm now expects a low- to mid- single-digit decline in currency-adjusted full-year sales, compared to its earlier forecast of flat year-on-year sales.

Puma also said that continued pressure on margins would make it unlikely for the company to meet its original guidance of low- to mid-single-digit growth in EBIT before special items. However, Puma maintained its forecast of an increase in 2013 net earnings compared to 2012.

Challenging business conditions in key markets pushed down Puma first-quarter net earnings 32 percent to 50 million euros, or $66 million. Sales for the period ended March 31 slipped 2.3 percent on a currency-adjusted basis to 782 million euros, or $1.03 billion, as reported.

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Dollar figures are converted from euros at average exchange rates for the period in question.

Operating profits (EBIT) fell 22.6 percent to 79 million euros, or $104.3 million, due to the decline in sales and gross profit margin, which in turn fell from 51.2 percent to 49.1 percent in the quarter. Puma attributed the pressure on gross profit margin to negative currency effects and, particularly in footwear, higher input costs.

Geographically, sales for the EMEA (Europe, the Middle East and Africa) region were down 4.8 percent on a currency adjusted basis to 348 million euros, or $459.7 million, impacted by soft retail spending and an unusually long winter.

Asia/Pacific revenues were down 2.9 percent to 173 million euros, or $228.5 million, on a currency-adjusted basis , while the currency-adjusted sales performance in the Americas improved 1.8 percent to 260 million euros, or $343.4 million.

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Currency-adjusted retail sales rose 13.9 percent to 135 million euros, or $178.3 million, and now represents 17.3 percent of total sales. Forty-five underperforming stores were closed by the end of the first quarter.

The lack of major sporting events in the first three months of 2013 weakened footwear sales, which fell 7.8 percent, and Puma apparel sales declined 1.1 percent. Accessories gained 11.9 percent in the quarter.