By  on October 26, 2010

PARIS — Puma AG said Monday it was taking legal action against its Greek joint venture partner and the former managers of the unit after discovering irregularities in its accounts that will cost it up to 130 million euros, or $181.39 million at current exchange rates, in one-off charges and write-offs.

The German activewear firm, a division of French retail-to-luxury group PPR, said it has launched an independent audit, appointed new local management and put a stop to the fraud at Puma Hellas SA.

“According to the preliminary findings of the audit, it is suspected that the Greek joint venture partner, along with members of the Greek local management, has committed a series of criminal acts,” it said.

“Puma AG’s management and supervisory board have resolved to assert all claims according to civil and criminal law against the Greek joint venture minority partner and members of the local Greek management,” the company added.

Puma, which will release its third-quarter results today, said that as a result, it would book an extraordinary write-off of 115 million euros, or $160.46 million, before taxes. This would force it to restate figures for prior fiscal years, but would not affect the cash position, it explained.

The impact on 2010 data was estimated at up to 15 million euros, or $20.9 million, to be booked in the fourth quarter. In addition, the company is planning a restructuring in Greece due to the irregularities and the general market situation, which could lead to additional one-time charges of around 15 million euros.

Puma said last week that its chief executive officer, Jochen Zeitz, would step down to head a new sport and lifestyle division at parent company PPR. The company is today expected to provide details of its five-year strategic plan to grow total revenues from about 2.5 billion euros, or $3.49 billion at current exchange rates, to about 4 billion euros, or $5.59 billion, by 2015.

Separately, PPR said the fraud should have a retroactive impact of 70 million euros, or $97.7 million, on shareholders’ equity as of Jan. 1, 2010. Meanwhile, net income for 2010 should take a 20 million euro, or $27.9 million, hit.

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus