GERMANY: Puma Q1 profit hit by European slowdown
- Net profit fell 4.9% to EUR74m
- Sales increased 6.1% to EUR820.9m
- EMEA sales declined 1.4% to EUR368m
Sportswear firm Puma has seen its first quarter profit slip 4.9% after being hurt by sluggish consumer spending in Europe.
Net profit in the three months ended 31 March fell to EUR74m, while consolidated sales increased 6.1% to EUR820.9m (US$1bn). Gross profit margin fell 120 basis points to 51.2% due to input price pressures combined with negative hedging impacts, and product and regional mix.
In the EMEA region, sales declined by 1.4% to EUR368m, which the company attributed to restrained consumer spending in the wake of the financial crisis in the eurozone. The late arrival of winter also dampened sales at wholesale accounts and retailers and slowed the intake of spring collections.
The company said it is responding to these challenges. It has appointed Sergio Bucher, formerly the company's head of global retail, as general manager for Europe. It is also in the process of streamlining its country organisations, and centralising some of its back-office functions on a regional level.
Stronger sales in Asia Pacific and the Americas counterbalanced the weaker EMEA revenues, with Asian sales up 10.2% to EUR192.1m, and an 8.5% increase in the Americas to EUR260.8m.
Footwear sales softened over the quarter, down 2.1% to EUR414.6m. However, there have been "promising results" in some of its recent footwear product launches, including the Archive Lite shoe which is seeing "double-digit sell-through in key leading doors" in Europe and Asia.
"After a strong finish in 2011, PUMA's first-quarter sales growth could not keep pace with that of recent quarters, translating into weaker bottom line results, said Puma CEO Franz Koch.
"Our first quarter sales performance indicates that we are facing challenges in
Europe. As a consequence, we have begun to respond to these challenges, optimising the efficiency of our business model in the EMEA region.
"In addition, I am confident that the product innovations we have in the pipelines will contribute to achieving our full-year sales and earnings targets against the background of this extraordinary sports year."
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