Puma Earnings Fall, But US Biz on the Upswing

PARIS — Even as global economic woes are hurting Puma’s overall growth, the athletic brand is getting back on track in the U.S. market.

The company, which is majority owned by PPR, said last week that U.S. backlogs are up 12 percent — and analysts said the stateside business is a bright spot.

“Given the difficult environment, we are impressed with this backlog growth,” Christopher Svezia, an analyst at Susquehanna Financial Group, wrote in a research note last week. “Puma’s results reflect some of the changes management has taken to clean up its U.S. marketplace, with cleaner inventories at retail and new production distribution in the family footwear channel.” The running and soccer categories, in particular have been strong, Svezia noted.

Still, Puma couldn’t overcome the international slowdown. The company saw its fourth-quarter net earnings drop 78.8 percent to 8.1 million euros, or $10.7 million.

Boosted by a 26 percent jump in sales of bags, balls and other sporting accessories, fourth-quarter consolidated sales grew 7 percent on a currency-adjusted basis, to 561.3 million euros, or $739.9 million at average exchange.

Puma said net earnings for 2008 declined 14 percent to 232.8 million euros, or $342.5 million, below analysts’ estimates. Heavy investments in a highly charged sporting year, including the African Cup of Nations, the Olympics and the Volvo Ocean Race sailing competition — in which Puma’s entry, Il Mostro, is battling for the lead — helped boost sales but weighed on profits.

“Despite a very difficult market situation and a weak consumer sentiment, Puma managed to post new sales records in the last financial year,” Chairman and CEO Jochen Zeitz said in a statement. “We have implemented measures in the fourth quarter to prepare us properly for the coming year and will react flexibly to further changes in the market.”

Full-year sales grew 8.5 percent on a currency-adjusted basis to 2.5 billion euros, or $3.68 billion. Business in the Europe, Middle East and Africa regions grew 7 percent to 1.29 billion euros, or $1.89 billion.

A 4 percent decline in the U.S., where mall business was particularly difficult, was offset by a double-digit jump in sales across Latin America to bring total business in the Americas up 8 percent to 651 million euros, or $957.8 million. Meanwhile, sales in the Asia-Pacific region grew 13 percent to 573.6 million euros, or $843.9 million.

Puma continued to expand its own retail business, growing it by 15 percent to 460 million euros, or $676.8 million.

Looking ahead, Puma declined to forecast 2009 performance given the economic climate. The brand has reduced its investments for 2009, with plans to spend between 65 million and 75 million euros, or $82.2 million and $94.8 million, including a 20 million euro, or $25.3 million, investment in a new company headquarters, dubbed Puma Plaza. — With contributions from Katie Abel

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