Highlights Q3
 

• Consolidated sales up more than 9% currency adjusted reaching € 713 million
• Gross profit margin remains on a high level at 53.6%
• EBIT reached € 125 million, up versus last yearEPS increase 4.5% from € 5.56 to € 5.81

Highlights January – September
 

• Global brand sales above € 2.1 billion
• Consolidated sales up almost 9% currency adjusted
•  Gross profit margin above 53%
• EBIT at € 313 million versus € 320 million last year
•  EPS at € 14.55 compared to € 14.40

Outlook 2008
 

• Orders increase 5% to € 1,163 million
• Management raises full-year sales guidance

Jochen Zeitz, CEO: ” Despite the very challenging economic situation and sluggish retail environment, PUMA was able to post another quarter of sales growth. Due to the year to date performance and our order books, we raise our sales guidance for our full-year outlook from a single-digit to a mid to high single-digit currency adjusted sales growth.”

Sales and Earnings Development

Global brand sales

PUMA’s brand sales, which include consolidated sales and license sales, reached € 778.6 million during Q3, thus a currency adjusted increase of 5.9% or 3.3% in Euro terms.

During the nine month period ending September, global brand sales increased currency adjusted 3.8% to € 2,148.6 million. Footwear sales increased 2.4% to € 1,158.1 million and Accessories 28.2% to € 252.6 million. Apparel sales decreased 0.4% to € 737.9 million.

Consolidated sales up 9% currency adjusted  

Consolidated sales in Q3 grew 9.2% currency adjusted to € 712.7 million.

By segments, Footwear increased 13.1% to € 412.8 million, Apparel 1.8% to € 245.3 million and Accessories 16.7% to € 54.6 million.

Sales after nine months were up 8.8% currency adjusted to € 1,962.9 million. Footwear improved 6.3% to € 1,132.2 million, Apparel 10.8% to € 683.4 million and Accessories 20.5% to € 147.3 million. 

Gross profit margin remains at a high level 

In Q3, the gross profit margin increased another 60 basis points reaching 53.6%. After nine months, the gross profit margin remained on a high level at 53.2%. Footwear margin increased from 52.3% to 53.1% and Apparel margin from 52.5% to 53.3%. Accessories reported 53.3% versus 53.9% last year.

SG&A 

Total SG&A expenses increased in Q3 by 9.5% to € 249.7 million and by 8.3% to € 710.6 million after nine months. As a percentage of sales, the cost ratio increased from 34.0% to 35.0% during Q3 and from 35.1% to 36.2% after nine months as expected. The higher cost ratio is due to the scheduled brand investments in marketing and retail.

For the nine month period, marketing/retail expenses increased 17.9% and accounted for € 371.1 million, representing a percentage of sales increase from 16.8% to 18.9%. Product development and design expenses were down 12.7% to € 37.6 million or from 2.3% to 1.9% of sales. Other selling, general and administrative expenses were up only 1.2% to € 301.9 million, which reflects a decline from 16.0% to 15.4% as a percentage of sales.    

EBIT
In Q3, EBIT increased by 1.0% to € 125.0 million. Due to the aforementioned brand investments, EBIT for the nine months period reported € 313.2 million compared to € 319.7 million. Nevertheless, a strong EBIT margin of 17.5% (LY: 18.5%) and 16.0% (LY: 17.1%) respectively was achieved.

The tax ratio was calculated at 29.0% versus 29.5% in the quarter and 28.7% versus 29.0% in the nine month period.    

Net earnings/Earnings per share

Net earnings in Q3 were on last year’s level and totaled € 89.0 million. Due to the brand investments, net earnings were down by 2.7% to € 224.7 million year-to-date. Net return reached 12.5% versus 13.3% and 11.4% versus 12.3% respectively.

Based on average outstanding shares, earnings per share were up 4.5% from € 5.56 to € 5.81 in Q3. Year-to-date earnings per share improved from € 14.40 to € 14.55.

Net Assets and Financial Position

Equity ratio above 62%
Total assets were down by 2.5% to € 1,906.6 million as of September 30, 2008 compared to September in the previous year. The equity ratio further strengthened from 60.0% to 62.3%.  

 
Working Capital
Inventories grew 17.3% to € 432.0 million and include the new consolidation in Korea. Receivables were up 6.1%, reaching € 532.5 million and in line with top-line growth over the last months. Total working capital at the end of September increased 19.4% and totaled € 599.6 million, mainly due to the new consolidation and low liabilities at balance sheet date. On a like-for-like basis, working capital as percent of sales was up only slightly versus last year.

Capex/Cashflow
Total Capex for the nine months period was € 79.1 million compared to € 56.6 million last year. The higher investments are according to plan and related to payment on accounts. In addition, € 24.9 million versus € 4.9 million were financed for acquisition cost.

Free Cashflow (before acquisitions) totaled € 17.2 million versus € 154.3 million last year.

Cash position
Total cash end of September stood at € 297.3 million versus € 532.5 million last year. Bank debts were down from € 69.3 million to € 61.1 million. As a result, the net cash position decreased from € 463.2 million to € 236.2 million year-over-year mainly due to the investments in share buy-backs.

Own Shares

PUMA continued its share buy-back program and purchased another 150,000 of its own shares during Q3. As of September, 850,000 shares were held as treasury stock in the balance sheet, accounting for 5.3% of total share capital, a total investment of € 202.8 million. The shares were purchased during the period beginning November 2007 until September 2008.

Regional Development

Faced with a continued tough consumer environment, the EMEA region reported a solid growth of 4.2% currency adjusted in the quarter, reaching € 388.1 million. Year-to-date, sales increased 7.1% and totalled € 1,078.8 million. The region now accounts for 55.0% of consolidated sales. Gross profit margin showed another improvement and increased from 54.5% to 55.2%. The order book end of September was up 1.1% to € 578.4 million, whereby last years order book was strongly impacted by orders related to the 2008 sport events.

Q3 sales in the Americas were up strong 18.7% currency adjusted reaching € 184.7 million. During the nine months period, sales increased 8.6% currency adjusted to € 480.2 million. The region now accounts for 24.5% of consolidated sales. The gross profit margin was at 48.9% compared to 49.7% last year which was due to a higher distribution business in Latin America. The order volume end of September was up by favorable 20.5% to € 282.4 million.

Sales in theUSoutperformed the order books reported end of June once again and were slightly up in Q3. Sales through nine months were down only 5.4%. Orders end of September turned around and show continuing positive signs, being now up 9.1% to $ 204.7 million.  

In the Asia/Pacific region, sales improved 11.9% currency adjusted to € 139.9 million in Q3 and by 14.0% to € 403.9 million year-to-date. The total region accounts for 20.6% of sales. The gross profit margin improved from 50.7% to 53.1%, mainly due to the consolidation of Korean market. Orders on hand were down 0.7% currency adjusted but were up 5.8% in Euro terms and totaled € 302.5 million.

Outlook 2008

Orders up 5%
Total orders as of September increased currency adjusted 4.7% totaling € 1,163.3 million. In Euro currency, orders were up by 5.3%. The orders are mainly for deliveries scheduled for Q4 2008 as well as Q1 2009.

In terms of product segments, Footwear orders are up currency adjusted by 6.8% to € 703.5 million, Apparel by 0.6% to € 393.1 million and Accessories by 8.4% to € 66.7 million.  

Management raises full-year sales guidance

Given the results achieved so far this year as well as the order book for Q4, management raises its sales guidance for the full-year outlook from a single-digit to a mid to high single-digit currency adjusted growth.  

As already announced, PUMA will continue with its brand investments as planned in order to explore the long-term growth potential.