Puma Takes Currency Hit in Q1, Guidance Adjusted Down

Puma SE’s profit margins took a 30 percent hit in the first quarter as currency headwinds created a sizeable challenge for the brand. As a result of currency pressures, the company adjusted down its 2015 outlook.

Footwear presented a bright spot for the company, it was the top-performing segment, posting a 7.8 percent currency-adjusted sales increase.

Net Income: Puma’s consolidated net earnings declined by 30.3 percent from 36 million euros, or $40.7 million, to 25 million euros, or $28.3 million.

EPS: Earnings per share in the first quarter decreased to 1.66 euros, or $1.88, from 2.38 euros, or $2.69.

Net Revenue: Currency-adjusted sales increased by 4.4 percent to 821 million euros, or $927.7 million. In reported terms, this corresponds to a growth of 13.2 percent.

Executive Insights: “Puma’s first quarter sales grew slightly stronger than expected. This was mainly caused by a very positive development in footwear. We are working very hard to improve our product offer, and although we know we have some ways to go, we feel that this growth in footwear confirms that we are on the right path.”

“The negative development in currencies, had a significant negative impact on our gross profit margin and operational expenses and therefore also on our EBIT and net earnings. We do work hard to counter these negative currency effects, but do currently not have enough leverage to fully neutralize the impact and have therefore adjusted our outlook for the full year EBIT and net earnings.” – Bjørn Gulden, Puma’s CEO, in a release.

Looking Ahead: Puma adjusted down its 2015 guidance due to currency pressures and increased operating expenditures. The company now foresees a drop in the gross profit margin for the full year in a range of 100 to 150 basis points; EBIT for the full year to come in at a range between 80 million euros, or $90.4 million, and 100 million euros, or $113 million; and net earnings will be impacted accordingly.

*All dollar amounts were calculated  based on the average currency exchange rate for the period January 1, 2015-March 31, 2015.

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