The cost of restructuring took a big bite out of Puma AG’s first-quarter profits, but currency fluctuations worked in the activewear company’s favor as it generated an increase in revenues.
The firm, owned by PPR and based in Herzogenaurach, Germany, reported Friday its net income for the three months ended March 31 fell 93.8 percent to 5.6 million euros, or $7.3 million, from 90.1 million euros, or $135.2 million, during the comparable 2007 period. The more recent quarter includes 110 million euros, or $143.9 million, in pretax restructuring charges. Earnings came to 0.37 euros, or 48 cents, a diluted share versus 5.76 euros, or $8.64, in last year’s quarter.
Sales were up 3.6 percent to 697.4 million euros, or $912.2 million, from 673.3 million euros, or $1.01 billion, and increased 0.8 percent excluding the effects of currency fluctuations. Dollars figures have been converted from euros at average exchange for the period to which they refer.
Highlighting regional growth was a 19.7 percent increase in sales in the Americas, to 178.1 million euros, or $233 million. Even adjusted for currency shifts, sales were up 11.5 percent in the region. In Europe, the Middle East and Africa, Puma’s largest volume region, sales declined 6.4 percent to 366.1 million euros, or $478.9 million, and fell 3 percent when adjusted for currency. Asia-Pacific sales were 153.3 million euros, or $200.5 million, a 14.8 percent increase reduced to a 1.2 percent decline when accounting for currency fluctuation.
In euros, footwear sales increased 0.7 percent to 397.1 million euros, or $519.4 million, and apparel revenues dropped 4 percent to 222.4 million euros, or $290.9 million. The firm’s smaller accessories segment ballooned 64.7 percent during the quarter to 77.9 million euros, or $101.9 million. Excluding currency effects, footwear sales were down 0.8 percent, apparel was down 8.1 percent and accessories rose 56.7 percent.
Gross margin slipped slightly in the quarter, to 52.1 percent of sales from 53.4 percent in the first quarter of 2008.
Jochen Zeitz, chief executive officer, said the company planned “to implement further measures to align our cost structure with the current market environment, ensuring a platform for profitable growth in the future. The measures are expected to accelerate our operational processes, make the organization even more efficient and to further reduce time-to-market for our products.”