Puma, the German activewear firm that France’s PPR is trying to buy, on Monday warned a drop in orders in the U.S. would rein in full-year sales and earnings.
As Puma reported a 3.7 gain in first-quarter profits, the firm forecast that weak order-writing at the end of the quarter would result in “low single-digit” growth through the end of the year instead of the double-digit profit hike forecast earlier.
HSBC analyst Antoine Belge, in a note to investors, speculated the profit warning “might explain why the Herz family [which controlled Puma before the PPR deal] agreed to sell its 27.1 percent controlling stake at 330 euros [$448.40 at current exchange] per share [instead of a higher multiple].”
PPR, the French retailer that controls Gucci Group, last month said it would buy a controlling stake in Puma and would offer 330 euros, or $448.80, a share for the rest of the company’s outstanding publicly held capital.
Puma shares spiked above 340 euros ($462.33) in the wake of the deal before sliding to close last Friday just below 335 euros ($455.53).
Belge said the profit warning represented a “mixed bag” for PPR in that it “increases the likelihood of Puma shares being tendered” at the proposed price of 330 euros — a fact some analysts doubted after the share price spiked — while “decreasing the value of the acquired business.”
PPR shares fell 0.24 percent, to 127 euros, or $172.72, in trading on the Paris Bourse. In Frankfurt, Puma shares gained 0.06 percent, to 335.13 euros, or $455.78.
Puma said net earnings in the three months through April improved to 96.6 million euros, or $128.2 million, from 93.1 million euros, or $112.4 million, on net sales that gained 2 percent, to 655.8 million euros, or $1.33 billion, from 642.8 million euros, or $776.3 million. Currency conversions were made at average exchange rates for the respective periods.
The U.S. was the blight on the numbers. Sales there slumped 4.1 percent, to 174.3 million euros, or $231.4 million, due to a negative currency affect, and order writing dropped 17.6 percent at the end of the quarter.
"I think that all anyone really wants in life is to have people understand us for who we actually are, despite everything," says Ruth Negga. The actress talks "Preachers" season 2 and more on WWD.com. #wwdeye (📷: Dan Doperalski)
"That's something that resonates with me too because I'm so locked into a number. If I go over that number it completely ruins my day so it's nice to get detached from the number on the scale." - Chelsea Handler on Kelly LeVeque's book "Body Love." #wwdeye (📷: John Salangsang)