Puma Issues Flat Outlook

BOSTON — On the heels of reporting lessthan- stellar full-year financial results — where earnings plummeted 45 percent — Puma AG forecast that 2010 could show improvement.

CEO Jochen Zeitz cited, in part, the tumultuous global economy for having a negative impact on his firm last year.

But he said in a statement last Tuesday, “Puma remained firm in a difficult environment, posting an only moderate decline in annual sales along with the second-best cash flow development in the history of the company. The comprehensive restructuring and reengineering program that we implemented during the year enabled us to become an even more efficient and focused company that is aligned to today’s economic realities.”

Because the firm said it does not anticipate any special items related to restructuring efforts, net earnings are expected to improve in 2010, Puma said. The firm added that sales would come in at least flat with the prior year.

Susquehanna Financial Group analyst Christopher Svezia called Puma’s outlook “cautious” and cited in a report last week “challenging conditions in Southern and Eastern Europe and Japan [that] could offset more subdued expectations from event-related gains,” such as from this year’s soccer World Cup.

The analyst, however, went on to write that “the top-line outlook in the U.S. remains a bright spot given a better and more rationalized distribution strategy.” And Svezia expects most of Puma’s earnings growth to come in the back half of 2010, he wrote, thanks to easier sales comparisons with the prior year and assuming improved macroeconomic conditions.

Last Wednesday, Puma reported that for the fourth quarter net income doubled to 16.2 million euros, or $23.4 million at average exchange, up from 8.1 million euros a year ago. On a per-share basis, the firm earned 1.08 euros, compared with 0.6 euros the previous year. Special items related to the restructuring negatively impacted earnings by 18 million euros, the company said.

Fourth-quarter net sales fell to 489.5 million euros, or $723 million, versus 561.3 million euros last year. Footwear sales declined 20 percent to 241.9 million euros, or $357.3 million. In the Americas, sales dropped 11 percent to 153 million euros, or $226 million, made up of sales in the U.S. totaling $132.7 million.

For the year, however, net income fell to 128.2 million euros, or $178.8 million, versus 232.8 million euros a year ago. Per share, the firm earned 8.5 euros, from 15.15 euros previously. Special items impacted the year’s results, too, including 127.8 million euros related to restructuring the firm’s retail portfolio, as well as other cost-cutting initiatives.

Annual sales totaled 2.46 billion euros, or $3.43 billion, an decrease of 3 percent. Sales in the footwear category were 1.33 billion euros, or $1.85 billion, down 7 percent year-over-year.

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