GERMANY: Puma Q3 profit plunges on restructuring costs
Sportswear brand Puma saw third-quarter net earnings plunge as the company invested in its transformation plan and faced a challenging environment in Europe.
Net income fell 85.1% to EUR167.7m over the quarter ended 30 September. The decline came as the company booked EUR80m in one-off costs relating to the transformation plan, particularly around restructuring its European operations, rationalising its retail portfolio and reorganising global operations and functions.
However sales grew 6% on a euro basis to EUR892.2m, rising 0.5% in constant currency terms. EMEA sales declined 3.4% to EUR396.7m, while sales in the Americas rose 20.5% to EUR283.2m and Asia Pacific sales increased 8.3% to EUR212.3m.
The company attributed the European decline to the "severe impact" of the economic slowdown and restrained consumer spending.
As part of the transformation plan, the company is in the process of rolling out a new regional business model in Europe, reducing the number of organisational entities from 23 countries to seven areas. It has also begun consolidating its warehouse portfolio across Europe to generate further efficiencies and cost savings.
Over the quarter, the company decided to close approximately 80 unprofitable stores, mainly in mature markets. It will continue to open new stores in "profitable locations primarily in emerging markets". By the end of December 2013, Puma aims to operate 540 stores globally, down on its current store count of 590.
It is also planning to downsize its product range by 30% before the end of 2015. The majority of the reduction will come from streamlining regional and local ranges.
"PUMA posted a moderate increase in sales in the third quarter despite the challenging business climate in Europe," said Puma CEO Franz Koch.
"We have taken decisive actions to overcome the issues we are currently facing in particular in Europe. Our Transformation Program 2010-2015 in combination with immediate cost cutting measures and a strengthened product pipeline in Performance and Lifestyle for next year will provide a solid basis for sustainable and desirable growth."
Help test our new apparel sourcing tool.
Puma has named Björn Gulden as the sportswear brand's new CEO, succeeding Franz Koch, who left the company at the end of March....
Skatewear brand Volcom is set to increase its focus on sustainability, becoming the latest Kering-owned brand to undergo an Environmental Profit and Loss. ...
Indian online fashion retailer Myntra has acquired San Francisco-based virtual fitting room developer Fitiquette to help improve the shopping experience for Indian consumers....
French apparel group PPR is changing its name to Kering as it looks to position itself as a luxury and sportswear business....
Textile technology specialist Celliant is partnering with sportswear business Puma to incorporate its mineral fibre technology into the German company's Usain Bolt athletic apparel range....
French apparel and luxury group PPR is reportedly considering changing its name to Kering as it looks to focus on its luxury and sportswear businesses....
PPR's Redcats division has entered an agreement to sell its apparel and homeware brands Ellos and Jotex to Nordic Capital Fund VII for EUR275m (US$365m). ...
- No US rush to Myanmar despite end to sanctions
- Using worker surveys to drive supply chain change
- Where does VF supply chain sit in growth strategy?
- Investment continues in Ethiopia clothing sector
- Rana Plaza four years on – Timeline of change
- Driving ban intensifies Myanmar logistics hurdles
- Amazon wins on-demand apparel manufacturing patent
- Trump bolsters "buy American" with executive order
- Start-ups chosen to re-think fashion industry
- Inditex, Adidas and Patagonia top ethical report
- Global market review of denim and jeanswear – forecasts to 2022
- When Things Go Wrong - A Practical Guide to Managing Common Problems in Apparel Sourcing
- Myanmar - ISA Country Report
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Clothing Market in the Top 5 American Countries to 2021 - Market Size, Development, and Forecasts