Dr. Mario Theissen, BMW Motorsport Director is looking forward to the cooperation with PUMA: “The demands on a Formula One Team are very high. The right clothing is an important factor in that. Whether you are racing in the subtropical climate of Malaysia, under typical German weather conditions or whether you are travelling from and to races – quality, functionality and design of the teamwear must be right.
”PUMA performance racing shoes were first used by various drivers and teams in the 1970s and early 1980s. And since 1998 PUMA’s motorsport division has gradually assembled an impressive portfolio of sponsorships. In the 2004 season PUMA will be the official supplier of racing gear in several motorsport disciplines such as Formula One, F 3000, motocross, WRC etc.

In the light of PUMA’s ongoing and long-term commitment for the African football as the official supplier to eleven national teams across the continent, PUMA launched the African-themed fashion collections “From the PUMA Archives”, “Africa United” and African Football Fan Wear in the run-up to the World Cup 2010 in South Africa which is a great starting position for the tournament. From July 2009 on, the collections will be available in PUMA stores worldwide. The products such as T-shirts and sweatshirts will carry the „Cotton Made in Africa“ label.

In the second half of the year 2009, PUMA will produce 2% of its entire apparel collection with “Cotton Made in Africa” – including fan jerseys for the African National teams.

“We are proud that our African-themed collections have been created with African involvement which makes them much more authentic and more desirable,” said Jochen Zeitz, Chairman and CEO of PUMA. “PUMA’s commitment to Africa now goes beyond our position as the leading supplier for African Football Teams. Following our vision of creating a better world, we do our part to improve quality of life and environmental standards in Africa by supporting “Cotton Made in Africa”.

Cotton in Africa is produced without artificial irrigation due to the poverty, the lack of infrastructure and low water reserves. An efficient use of rainfall is therefore all the more important. The „Cotton Made in Africa“ project wants to create an efficient management of farms by offering training and advice. Techniques such as mulching to keep the soil covered and to prevent such a high-level of evaporation or balanced fertilisation are crucial. Farmers participating in the „Cotton made in Africa“ project are taught the relevant skills in facilities such as „Farmer Field Schools“.

PUMA is striving to integrate the idea of eco-efficiency into its product cycle, in order to harmonise business practice and the availability of natural resources. PUMA, for example, was the first sports goods company to ban PVC from its product range. Although PVC has very good technical characteristics, PUMA decided to take this step as the production and disposal of PVC can cause damage to the environment.

The documentary about environmental issues, which was filmed across fifty countries and shot entirely from the sky in high definition, offers a powerful commentary on the major environmental and social issues challenging our world and calls for a new awareness that protecting the earth is indispensable. It is the result of a collaboration between the photographer Yann Arthus-Bertrand, the producer and director Luc Besson and Francois-Henri Pinault, the Chief Executive of the French luxury group PPR – the majority shareholder of PUMA and the world exclusive partner of HOME.

“Creating awareness of our environment’s emergency state is crucial and the first step for an improved handling of our natural resources,” said Jochen Zeitz, Chairman and CEO of PUMA. “In line with our PUMAVision concept, PUMA has implemented numerous environmental initiatives through various programs that aim at reducing our “paw print” — the effects that PUMA’s operations and actions have on the environment. The HOME film inspires us to work towards making a positive contribution to our planet. We hope that it will inspire audiences everywhere,” he added.

puma.creative funds the screening of HOME at the Planetarium in Cape Town in South Africa, at the National Museum of Nairobi in Kenya and at the Institute of Contemporary Art (ICA) in Boston, organized in cooperation with the French Cultural Service amongst others.

It is the first movie to be released simultaneously across all media and all continents. The simultaneous worldwide release provides as many people as possible with the opportunity to watch this profound documentary as a global collective. Any proceeds from the sale of merchandising products related to the film will be donated to the organization www.goodplanet.org.

PUMAVision unites all PUMA initiatives that come under the heading ‘Corporate Social Responsibility’, giving them a coherent direction and framework. It comes from a vision of a world that is better than the one we know now—a world that is safer, more peaceful and more creative. The PUMAVision programs puma.safe, puma.peace and puma.creative reflect PUMA’s commitment to social and environmental responsibility and define the partnerships and initiatives PUMA will support and pursue.

For more information about the film, visit http://www.home-2009.com.

• Consolidated sales up slightly by almost 1% currency neutral
• Gross profit margin at 52%
• Operational result before special items at € 114 million representing 16% of sales, a decline of 9%
• First quarter result impacted by restructuring cost of € 110 million
• EPS before restructuring at € 5.36 compared to € 5.76

Market environment expected to remain difficult in 2009. Management takes further actions to act accordingly within the currently difficult market environment, in order to protect profitability and ensure profitable growth in the future.

GLOBAL BRANDED SALES

PUMA’s worldwide branded sales, which include consolidated and license sales, decreased currency neutral 3.1%. In Euro terms, sales are only slightly down 0.5% reaching € 737.7 million in a challenging environment versus € 741.2 million in last year’s quarter.

On a currency neutral basis, Footwear sales were down by 0.8% to € 407.1 million and Apparel 8.1% to € 237.4 million. Accessories increased by 0.6% to € 93.2 million.

LICENSED BUSINESS

Due to the take-over of a former licensee, the licensed business was down 41.6% on a currency neutral basis. Based on the licensed business, the company realized a royalty and commission income of € 5.0 million in the first quarter versus € 7.1 million in the prior year.

CONSOLIDATED SALES UP

In the first quarter, consolidated sales were up 0.8% on a currency neutral basis and 3.6% in Euro terms to € 697.4 million. Americas increased by double-digit rates whereas EMEA and Asia/Pacific were below last year. Currency adjusted, sales in Footwear were slightly down 0.8% representing € 397.1 million. Apparel sales decreased 8.1% to € 222.4 million due to high comparables which resulted from replica sales relating to the Football Euro Cup last year. Accessories were up a strong 56.7% to € 77.9 million which stems mainly from first time consolidation effects.

GROSS PROFIT ABOVE 52% 

In the first quarter, gross profit margin reached 52.1% compared to 53.4% last year. The decline was mainly due to the regional mix. Footwear reported 50.4% versus 53.4%, Apparel 53.7% compared to 53.4% and Accessories 55.6% versus 53.7% last year.

OTHER OPERATING EXPENSES

Other operating expenses increased by 5.4%, rising from € 241.0 million to € 254.1 million, or from 35.8% to 36.4% as a percentage of sales. Operating Expenses include depreciations of € 15.8 million, up 19.9% compared to last year.

OPERATIONAL RESULT

Operational result before special items amounts to € 114.0 million versus € 125.8 million last year, a decline of 9.4%. As a percentage of sales this relates to a margin of 16.3% versus 18.7%.

SPECIAL ITEMS – RESTRUCTURING CHARGE

PUMA has taken further actions to ensure long-term profitable growth in the future given the currently challenging economic environment and an unpredictable outlook. Management has implemented a cost reduction program which will reduce originally planned costs annually and lead to cost savings of up to € 150 million in FY2011. With the resulting one-time expenses of € 110 million (net of taxes € 75.2 million) in the first quarter, PUMA will optimize its retail portfolio, the global organizational structure and the operating processes. The number of employees in PUMA’s global workforce is expected to remain at previous year’s level while ensuring an even better alignment of resources with key business opportunities. The program was initiated as a proactive step in order to ensure an even leaner and more efficient platform that will help PUMA to focus even stronger on the numerous opportunities that arise in the sportlifestyle market in a challenging market environment accordingly. After adjustment for special items, EBIT amounted to € 4.0 million compared to € 125.8 million last year.

EARNINGS

Before restructuring costs, the company’s pre tax profit (EBT) accounts for € 112.4 million versus € 126.8 million and net earnings to € 80.8 million versus € 90.1 million, a decline of 10.3%. This results in earnings per share of € 5.36 compared to € 5.76. The operational tax ratio came in at 28.5% versus 28.9% last year. Taking into account the restructuring costs, earnings before taxes declined from last year’s € 126.8 million to € 2.4 million this year. Net earnings amounted to € 5.6 million versus € 90.1 and earnings per share as well as diluted earnings per share were at € 0.37 versus € 5.76 in last year’s quarter.

REGIONAL DEVELOPMENT

Marketing/Retail expenses remained unchanged to last year’s level and totaled € 127.2 million whereas Marketing was below last year and Retail increased due to full year effects. The cost ratio decreased from 19.0% to 18.2% of sales. Other selling expenses increased 20.0% to € 84.5 million, or from 10.5% to 12.1% of sales, mainly due to first time consolidations and currency impacts. Expenses for product development and design were up 23.9% to € 14.6 million, or as a percentage of sales from 1.8% to 2.1% as major development costs occurred in US-Dollars with the US $ strengthening on a like-for-like basis. Other general and administration expenses were down 10.5% and totaled 27.8 million, representing 4.0% of sales versus 4.6%. Sales in the EMEA region decreased currency adjusted by 3.0% reaching € 366.1 million versus € 391.1 million last year. Sales in last year’s quarter were impacted positively by major sport events. The region now represents 52.5% of consolidated sales. Gross profit margin increased to 55.1% compared to 54.7% last year.

Sales in the Americas were up currency neutral by 11.5% to € 178.1 million. The region now accounts for 25.5% of consolidated sales. Gross profit margin stood at 46.7% compared to 50.4% last year. In the US market, sales increased by 3.4% to $ 138.7 million in the first quarter.

Asia/Pacific sales decreased by 1.2% currency neutral but increased by 14.8% in Euro terms to € 153.3 million. The total region accounts for 22.0% of sales.

Gross profit margin reached 51.0% versus 53.0% last year.

NET ASSETS AND FINANCIAL POSITION EQUITY 

As of March 31, 2009, total assets climbed by 16.4% to € 2,108.0 million and the equity ratio reached 56.6% after 60.4% in the previous year.

WORKING CAPITAL

Inventories grew 22.6% to € 446.7 million and accounts receivable 5.3% reaching € 533.1 million. Adjusted by acquisitions and currencies, inventories were up 16.6% and accounts receivables by 1.3%. Due to lower liabilities at the end of March, working capital totaled € 596.9 million (ex acquisition € 581.2 million) compared to € 521.1 million last year.

CAPEX/CASHFLOW

For Capex, the company spent € 11.6 million in the first quarter versus € 24.3 million in last year’s quarter. In addition, an outflow of € 54.7 million (last year: € 16.6 million) related to acquisition cost. Due to the aforementioned investments and the higher working capital, free cashflow amounted to € -118.0 million compared to € -49.7 million last year. Excluding investment for acquisitions, free cashflow was € -63.3 million versus € -33.0 million. The decline compared to last year is mainly due to the aforementioned lower liabilities.

CASH POSITION

Total cash end of March stood at € 267.6 versus € 357.2 million last year. Bank debts were down from € 67.1 million to € 63.2 million. As a result, the net cash position decreased from € 290.0 million to € 204.5 million year over year, mainly due to the aforementioned acquisitions and a lower free cashflow in the first quarter.

SHARE BUYBACK

PUMA did not purchase own shares during the first three months. At quarter-end, 950,000 shares were held as treasury stock in the balance sheet, accounting for 5.9% of total share capital. Effective April 29, 2009 all own shares were cancelled and share capital was reduced accordingly. As of today, subscribed capital consists of 15,082,464 shares or € 38.6 million.

During the first quarter, sales came in better than the order books at the end of the fourth quarter 2008 had indicated. Due to seasonability, the current shift in future orders to at-once business in the current market environment, as well as the own retail business which is not included in the order books, quarterly orders are losing significance as an indicator of future sales. As a result, PUMA will not release future orders as of the first quarter 2009. After 14 years of consecutive growth, the year 2009 will be taken as a year of consolidation with a clear focus on adjusting the cost basis in alignment to the current business environment. First positive signs are not expected before 2010, the year that is highlighted by the upcoming Football World Cup in South Africa, where PUMA will once again be one of the most dominant brands. It currently outfits eleven African Football Federations including Egypt, the African Cup of Nations winner 2008, as well as the reigning World Champion, Italy. Furthermore, additional focus for 2009 is on working capital improvements to strengthen the cash position and therefore the return on capital employed by year-end. With all the implemented measures, PUMA plans to protect its industry-leading key financial parameters.

JOCHEN ZEITZ, CEO:

“Despite an ongoing slowdown in the global consumer’s environment, PUMA managed to post a solid sales and earnings performance before one time expenses in the first quarter. Due to the worldwide recession, we plan for business to remain challenging in 2009 and have therefore decided to implement further measures to align our cost structure with the current market environment, ensuring a platform for profitable growth in the future. The measures are expected to accelerate our operational processes, make the organization even more efficient and to further reduce time-to-market for our products. In addition to the opportunities that arise in the different sportlifestyle segments, PUMA will be particularly focused on the Football segment, in which we plan to further grow our market share with the first World Cup ever played on African soil, tapping into the significant growth opportunities offered by the market.”

Photo Credits: Robert Ashcroft/ PUMA

Through the acquisition of the Swedish firm, PUMA will strengthen its core business by adding complementary business in the area of Merchandising and Experience Marketing and exploiting qualitative synergies throughout all categories.

Brandon Company AB, based in Gothenburg, has specialized in branded Corporate Merchandising and Experience Marketing solutions for its clients, including blue-chip companies. Brandon employs 115 people across its offices in eight countries around the world, such as Sweden, Germany, Hong Kong, United Kingdom, and the United States.

PUMA and Brandon have already teamed up successfully in a distribution agreement for the official Volvo Ocean Race Merchandising collection since the beginning of 2008.

This acquisition represents a long-term growth opportunity for PUMA. It will have no substantial impact on PUMA’s financial situation.

As the COO, Koehler will be in charge of the functions Operations as well as Supply Chain Management, Logistics and IT. With this organizational change PUMA will streamline the organization within its Transformation program and integrate the responsibilities of the former Chief Supply Chain Officer into his resort.

“I am pleased that Andy Koehler will be joining PUMA as Chief Operating Officer, an important step in rebuilding and establishing a strong and effective senior management team under the leadership of PUMA’s future CEO Björn Gulden”, said Jean-Francois Palus, Chairman of the Administrative Board of PUMA SE. “Andy Koehler brings international and industry experience in sourcing and supply chain management necessary to manage PUMA’s operations through the company’s Transformation period and consequently its next phase of growth.”

“I am excited to be a member of PUMA’s top management team contributing in supporting the company and brand strategy within its Transformation program and beyond”, said Andy Koehler, Chief Operating Officer of PUMA. “PUMA has an enormous potential to tap both the sports performance and lifestyle markets with its design and innovation power as well as its unique brand heritage and I am eager to support reaching the business and growth targets within the next stage of the company’s development.”

Andy Koehler has a broad international experience in various industries such as the sporting goods, automotive Tier 1 industries and consumer goods. Before joining PUMA, he was Managing Director Hong Kong and Head of Global Sourcing at adidas Group, where he led the global sourcing activities across all product categories for adidas, Reebok, Taylormade and others. From 2004 to 2008 he held the position as Vice President Purchasing at automotive and Industrial products company Johnson Controls Automotive and was member of the leadership team responsible for Europe, South Africa and South America.

Andy Koehler graduated at the University of Karlsruhe with a Masters in Business Administration and Engineering. He will be based at the PUMAVision Headquarters in Herzogenaurach, Germany.

• Consolidated sales fall by 2.3% currency adjusted to € 782 million
• EPS reduced from € 4.92 to € 3.36
• Transformation and Cost Reduction Program on track
• New Chief Executive Officer Björn Gulden appointed
• PUMA partner Borussia Dortmund reaches Champions League final

Michael Laemmermann, Chief Financial Officer of PUMA SE: “In the current challenging business climate, especially in Europe and in Asia, we are continuing to implement our Transformation and Cost Reduction Program aimed at improving efficiencies and our cost base. This will increase PUMA’s profitability in the long-term. Confirming our increased focus on Performance, PUMA’s visibility and credibility as a premium football brand have been further enhanced with Borussia Dortmund’s progress to the Champions League final.”

BUSINESS CLIMATE IN EUROPE REMAINS CHALLENGING

Sportlifestyle company PUMA recorded a decline in first quarter sales as Eurozone retail spending continued to weaken and sales in Asia were affected by an unusually long winter. Sales fell by 2.3% in currency adjusted terms to € 782 million when compared to the first quarter of 2012.

PUMA’s sales in the Americas improved by 1.8% currency adjusted to € 260 million. There were strong performances in Mexico and Brazil, where Teamsport was bolstered by Rio de Janeiro soccer club Botafogo, and Argentina, where Lifestyle collections are resonating well. Our Cobra PUMA Golf division continues to deliver outstanding results, which is also reflected in rising sales in North America.

Sales in the EMEA region were impacted in particular by the softening in retail spending, exacerbated be the unusually long winter, and fell by 4.8% currency adjusted to € 348 million.

Strong performances in Russia, Turkey and the D-A-CH region, where classic footwear models such as the Suede and new Motorsport apparel lines resonated well, could not completely offset weak performances in Italy and France. Steadfastly high levels of unemployment in the southern regions of the Eurozone added to the difficult retail environment.

In the Asia/Pacific region, sales declined by 2.9% currency adjusted to € 173 million. India, supported by excellent sales in Running and Teamsports, and Australia delivered positive performances which could not quite offset the less satisfactory numbers from Japan, where there was an unusually harsh winter, and China, where Fitness & Training products in particular did not perform as expected.

SATISFYING RETAIL PERFORMANCE

PUMA’s Retail sales increased by 13.9% currency adjusted to € 135 million, representing a 17.3% share of total sales. This rise in sales was supported by excellent results from our e-commerce business, particularly in North America.
 

LACK OF SPORTING EVENTS IMPACTS FOOTWEAR SALES; MOBIUM ON THE RISE

In the first quarter of 2013, Accessories performed exceptionally well during the first three months of 2013, rising by 11.9% currency adjusted to € 152 million. This outstanding performance was once again led by Cobra PUMA Golf and our North American joint venture for socks and bodywear.

Apparel sales declined modestly in the first quarter by 1.1% currency adjusted to € 256 million. Although Fundamentals were lower, Cobra PUMA Golf and Running continued to perform well. In Teamsport, the spotlight remains firmly on our most successful team, Borussia Dortmund, whose journey to this season’s Champions League final at the end of May has captured the imagination of football fans around the world underlining PUMA’s position as a premium football brand.

PUMA has also recently successfully introduced its ISPO award winning PUMA ACTV and RCVR performance apparel. By fusing compression technology with inbuilt athletic taping, ACTV and RCVR apparel increase the body’s performance and improve its recovery times, taking this category to the next level.

Footwear sales declined by 7.8% currency adjusted to € 373 million. The decline was caused in part by the Teamsport category, which did not perform as well in a non-event year, and Training & Fitness was impacted by the shrinking demand for toning products. In Lifestyle PUMA’s new range of Suede and Archive Lite Models were very well received, with our Future Suede Lite and TX-3 shoes resonating extremely well with consumers in the Asia/Pacific region.

Following the launch of “The Nature of Performance” brand platform to revitalize our Performance categories, PUMA Running was invigorated by our new Adaptive Running shoe, the PUMA Mobium Elite. The Mobium Elite is delivering encouraging sell-through in many markets, including the United States and Asia/Pacific region.

TRANSFORMATION PROGRAM BEING IMPLEMENTED ACCORDING TO PLAN

The implementation of PUMA’s Transformation Program continued during the first quarter. The set up of PUMA’s new Business Unit, supported by our Performance and Lifestyle pillars, is now complete and the evolution to a market and consumer focused organization continues. Each of PUMA’s six Business Units will be managed by one fully accountable Business Unit General Manager. Each team is wholly situated at one location to be able to react faster to consumer trends and optimize each team’s efforts. PUMA’s European consolidation of 23 countries into 7 areas is also on track, with our D-A-CH and Iberia areas now established. In retail, 45 underperforming stores were closed by the end of the first quarter.

PUMA will continue to execute on all of the measures set out under the Transformation and Cost Reduction Program in 2012 in order to benefit the Company in both the mid- and long-term.
 

GROSS PROFIT MARGIN SOFTENS TO 49.1%

PUMA’s gross profit margin fell from 51.2% to 49.1% year on year. Pressure on the gross profit margin in the first quarter came in the most part from two sources: Substantial currency headwinds due to the negative hedging position in the first quarter of 2013 compared to the same period last year, and also continued inventory management with a particular focus on Footwear, combined with higher input costs. As a consequence, Footwear margins dropped from 49.5% to 46.1% and Apparel retreated from 53.5% to 51.5%, while Accessories improved from 51.9% to 52.6%.

OPEX DECREASE AS A RESULT OF THE TRANSFORMATION AND COST REDUCTION PROGRAM

The broad approach undertaken to reduce costs by PUMA under both programs enabled the Company to reduce operating expenditure in nearly all areas, resulting in a decrease in OPEX of 3.9% to € 310 million.

OPERATING RESULT (EBIT) IMPACTED BY DROP IN GROSS PROFIT MARGIN

Despite the cost savings achieved by the measures undertaken under the Cost Reduction Program, operating profit declined in the first three months of 2013 from € 102 million to € 79 million due to the decline in sales and gross profit margin. As a consequence, the EBIT ratio decreased from 12.4% last year to 10.1% this year.

FINANCIAL RESULT DECLINES

The financial result declined from € 1.1 million to € -4.0 million in the first quarter, due mainly to negative currency conversion impacts.

EARNINGS BEFORE TAXES (EBT) RETREAT

PUMA’s EBT for the first quarter declined to € 75 million in 2013 compared to € 103 million in 2012, representing 9.6% of sales compared to 12.6% for the same period last year. Consequently, tax expenses abated from € 28 million to € 22 million, representing a tax rate of 29.3% versus 27.1% for the first quarter of 2012.

NET EARNINGS SOFTEN

Consolidated net earnings dropped by 32.0% from € 74 million to € 50 million. Earnings per share therefore also fell back from € 4.92 in 2012 to € 3.36 in the first quarter of 2013.
 

EQUITY CONTINUES TO STRENGTHEN

PUMA’s equity base continued to strengthen, with the equity ratio moving up slightly from 66.4% to 66.7% compared to the first quarter of 2012. Shareholder’s equity is now equivalent to € 1,676 million, up from € 1,652 million.

WORKING CAPITAL INCREASES

PUMA’s overall Working Capital increased by 7.0% to € 775 million due to the reduction of working capital related liabilities. A continued strong emphasis on inventory management resulted in almost flat stock levels at € 592 million. Trade receivables declined by 4.3% to € 594 million, due to the lower revenues in the quarter.

CASHFLOW / CAPEX

The Free Cashflow improved from € -200 million last year to € -154 million this year due to lower payments for acquisitions in spite of the decline in earnings before tax.

Capex declined from € 14 million to € 9 million, which was mainly invested in the opening and refitting of selected retail stores as well as office and IT equipment.

CASH POSITION IMPROVED

PUMA’s net cash position improved slightly from € 203 million to € 207 million at the end of the first quarter.
 

NEW CHIEF EXECUTIVE OFFICER APPOINTED

PUMA SE’s Administrative Board appointed Björn Gulden as PUMA’s new Chief Executive Officer (CEO), effective 1 July 2013. Björn brings to PUMA an extensive international experience of nearly 20 years in the sporting goods and footwear industry, where he has held a variety of senior management positions.

In view of PUMA’s first quarter results and of continuing economic uncertainty in certain key markets, Management now expects a low- to mid-single-digit decline in currency-adjusted full-year net sales. This forecast represents a slight downward revision compared to the guidance provided with the 2012 full-year results.

Management reiterates its expectations for continued pressure on the gross profit margin. Under these circumstances, PUMA is also unlikely to meet its original guidance of low- to mid-single-digit growth in EBIT before special items. However, PUMA’s Management confirms that it expects net earnings to increase compared to the 2012 level.

Photo Credits: Conné/ PUMA