* Consolidated sales up almost 7%
* Strong gross profit margin, up 120 basis points to 53.4%
* Brand investments continue according to plan
* EBIT at € 126 million representing almost 19% of sales versus 21% last year
* EPS at € 5.76 compared to € 6.02
* Orders up currency neutral 12% to nearly € 1.2 billion
* In a challenging market, management confirms a single-digit sales increase on a currency neutral basis
Sales and Earnings Development
Global branded sales
PUMA’s worldwide branded sales, which include consolidated and license sales, rose currency neutral 0.5%. In reporting terms, branded sales reached € 741.2 million versus € 762.1 million due to the strength of the Euro against most of the related currencies.
Footwear sales were down by 4.6% to € 404.1 million. Apparel was almost on last year’s level totaling
€ 246.9 million, and Accessories improved by 36.0% to € 90.1 million.
On a comparable basis, licensed sales were flat. However, due to the take-back of the former license market Korea, the licensed business was down by 35.6% currency neutral to € 67.8 million. Based on the remaining licensed business the company realized a royalty and commission income of € 7.1 million in the first quarter versus € 9.7 million in the prior year.
Consolidated sales up almost 7%
In Q1, consolidated sales grew 6.6% currency neutral (2.7% in Euro terms) to € 673.3 million. Sales in Footwear were almost flat versus last year representing € 394.2 million, with all regions achieving satisfactory performance except the US. Apparel sales improved by 18.5% to € 231.8 million and Accessories by 16.5% to € 47.3 million and all regions contributed with double-digit growth.
Gross profit at 53.4%
In Q1, gross profit margin reached 53.4% compared to 52.2% last year. The Footwear margin was up from 52.1% to 53.4% and Apparel increased from 51.9% to 53.4%. Accessories reported 53.7% compared to 54.9% last year.
In total, SG&A rose 9.9% to € 227.8 million in Q1 2008. As a percentage of sales, the cost ratio was at 33.8% versus 31.6% last year.
Marketing/Retail expenses were up by 20.6% to € 120.4 million that was due to higher marketing investments and the Retail expansion as planned. As a percentage of sales, this represents a cost ratio of 17.9% compared to 15.2% in the previous year. Product development and design expenses were down by 11.4% to € 11.6 million, or from 2.0% to 1.7% of sales, mainly due to currency effects. Other selling, general and administrative expenses increased 1.6% to € 95.9 million but declined from 14.4% to 14.2% of sales.
EBIT amounts to € 125.8 million versus € 134.8 million last year. As a percentage of sales this relates to a EBIT margin of 18.7% versus 20.6%.
The tax ratio was 28.9% versus 29.1% in last year’s quarter.
Net Earnings/Earnings per share € 5.76
In Q1, net earnings reached € 90.1 million versus € 96.6 million last year. The net return amounts to 13.4% versus 14.7%. Earnings per share were € 5.76 versus € 6.02 last year. Diluted earnings per share were calculated at € 5.76 compared with € 6.01.
Net Assets and Financial Position
Equity ratio above 60%
As of March 31, 2008, total assets climbed by 0.8% to € 1,811.5 million and the equity ratio reached 60.4% after 60.9% in the previous year.
Working capital Inventories grew 5.9% to € 364.5 million, which is in line with or even better than the order growth end of the quarter. Accounts receivables were down 2.5%, reaching € 506.2 million, versus a sales growth of 2.7% during Q1. Total working capital at the end of March totaled € 521.1 million compared to € 496.1 million last year.
For Capex, the company spent € 24.3 million in Q1 versus € 14,8 million in last year’s quarter, whereas € 6.4 million were related to payment on accounts. In addition, € 16.6 million (last year: € 1.6 million) were financed for acquisition cost.
Due to the mentioned investments and the seasonal higher working capital requirement, free cashflow amounts to € -49.7 million compared to € -9.8 million last year. Excluding investment for acquisitions free cashflow was € -33.0 million versus € -8.2 million.
Total cash end of March stood at € 357.2 versus € 402.4 million last year. Bank debts were up from € 63.5 million to € 67.1 million. As a result, the net cash position decreased from € 338.9 million to € 290.0 million year over year whereby € 107.7 million (last year: € 41.6 million) were spent for the share buyback program in the first quarter.
PUMA purchased another 450,000 of its own shares during the first three months. At quarter-end, 575,000 shares were held as treasury stock in the balance sheet, accounting for 3.6% of total share capital.
Sales in the EMEA-region increased currency adjusted 9.7% reaching € 391.1 million versus € 360.9 million last year, with growth in all categories. The region now represents 58.1% of consolidated sales. Gross profit margin increased to 54.7% compared to 53.7% last year. Orders were up 10.9% currency adjusted to € 644.8 million.
Sales in the Americas were down currency neutral 5.6% to € 148.7 million. Footwear was below last year but accessories and apparel were up double-digit in the quarter. The region now accounts for 22.1% of consolidated sales. Gross profit margin further improved from 49.7% to strong 50.4%. The order book reported a currency neutral increase of 3.2%. In the US market, sales were down 14.2% to $ 134.1 million, affected by the continued moderate environment in the mall-based business. Orders for US end-of-quarter declined 20.8%.
Asia/Pacific reported the strongest growth with solid performance in all categories. Sales increased 13.3% currency neutral to € 133.5 million. The total region accounts for 19.8% of sales. Gross profit margin was strongly up by 160 basis points to 53.0%. Order books reached € 289.7 million, an increase of 23.7% over last year.
Future orders up 12% to nearly € 1.2 billion
In comparable terms, consolidated orders were up by 12.1%, or in reporting terms, orders increased 6.5% to € 1,170.4 million. Like-for-like, Footwear was up by 10.2% to € 677.9 million, Apparel improved 14.3% to
€ 418.2 million and Accessories 18.3% to € 74.3 million.
Management confirms a single-digit sales increase on a currency neutral basis
Management reaffirms a currency adjusted single-digit sales growth for the fiscal year 2008 despite a continued difficult consumer environment.
During the exceptional sport year 2008 PUMA continues with its marketing investments as planed in order to support the long-term growth potential. The brand investments could affect 2008’s EBIT margin. In a volatile market environment it is difficult to outline the final impact on profitability.
Jochen Zeitz, CEO: “In the midst of an overall economic environment that continues to be challenging, PUMA has shown resiliency in both growth and desirability. Despite a difficult 2008 outlook, we will continue to invest in our planned initiatives to capitalize on major opportunities with global sporting events and fully maximize PUMA’s long-term potential.”