• Net earnings down 15.6% to EUR38.5m
  • Currency-adjusted sales flat
  • Gross profit margin reduced to 50.0% from 52.5% in Q2 last year

Sporting goods company Puma has posted a 15.6% drop in second quarter net earnings, after reduced margins offset lower operating costs achieved through restructuring.

Following a reengineering and restructuring programme in the first quarter, operating expenses decreased by 1.8% in the second quarter to EUR242.2m (US$347.7m).

However, the overall market environment and a change in regional sales mix caused the reduction in gross profit margin, to 50.0%, said PPR Group-owned Puma.

Second quarter sales increased 4.1% in Euro terms, but footwear fell 2% to to EUR600.3m.

Six month consolidated sales were up 0.4% on a currency-neutral basis and 3.8% in Euro terms to EUR1.3bn.

Net earnings were EUR44.0m in the first half of the year, from EUR135.7m net earnings in 1H 2008, but included a one-time restructuring charge of EUR110m.

The company said in its guidance that the challenging and volatile retail industry may negatively impact sales in second half.

Jochen Zeitz, Puma CEO, said: "Despite an ongoing challenging market environment and the global economic recession, Puma achieved a solid performance in the first half of 2009.

"The restructuring and reengineering program has already shown first effects and we will continue to strictly proceed while focusing on efficient measures to strengthen the brand and its products in the coming quarters." 

Click here for the full financial release from PPR Group.

INSIGHT

Although Puma did not give exact figures, it painted a rather gloomy picture in its guidance for the second half of the year.

First half sales were up though, leaving some cause for optimism.

But Puma's cautious outlook suggests the decline of private consumption could continue a little longer.

The company's second quarter and first half performance was overshadowed by a pro-active restructuring and reengineering programme that left net earnings down.

It expects improvements to be realised over the next 18 months as the programme continues to yield additional efficiencies and cost savings though.

Puma's cautious approach followed flat sales in the second quarter, compared to a 3% decline at German counterpart Adidas earlier in the week.

By Joe Ayling, news editor.