PARIS — Puma remains under pressure from volatile currencies and marketing spending.
The German activewear firm, which is controlled by French group Kering, said it registered a loss of 3.3 million euros, or $3.6 million, in second-quarter net earnings. This compares to a profit of 4.2 million euros, or $5.8 million, in the same prior-year period.
Total sales for the quarter ended June 30 gained 18.5 percent to 772.7 million euros, or $854.6 million, driven by strong footwear sales across all regions. In currency-adjusted terms, the increase stood at 7.6 percent.
Accessories also advanced, up 3.6 percent, while apparel was flat against high comparables related to the sales of replica jerseys during the soccer World Cup.
By geography, the Americas emerged as the frontrunner, logging an increase of 11.6 percent in the quarter.
For the first six months, the company reported a decline in net profits of 45.9 percent to 21.5 million euros, or $24 million. Sales rose 15.7 percent to 1.6 billion euros, or $1.8 billion, again buoyed by double-digit footwear advances. Currency-adjusted, the first-half gain stood at 5.9 percent.
All dollar rates are calculated at average exchange rates for the period concerned.
The company, which sources its goods in Asia using American currency, but resells them in many other non-dollar markets, warned back in May that currency fluctuations would dent its profitability for the year.
Puma’s gross profit margin declined 90 basis points to 46.8 percent in the first six months of the year, the company said.
Bjørn Gulden, chief executive officer of Puma SE, explained: “The negative effect of currencies is continuing to hurt our gross profit margin and increases our operational expenses, thus reducing our earnings. We are of course working to offset the impact of this by gradually increasing sales prices in markets that are hurt by the negative effects, and we are, when possible, moving some of the sourcing to the local markets. These measures are currently not enough to totally offset the loss in reported gross profit margin.”
He said despite the pressure on margins, the company would continue investing in marketing, IT and the overhaul of its retail network.
“We saw a continued positive development of our sales in Q2. This was again driven by a strong growth in footwear. We have said that growth in footwear is key for us to turn the company around and feel that the investment in new and innovative products is starting to pay off,” he added.