It seems the time has passed when this sport and lifestyle brand regularly showed strong double-digit growth, but Puma – given the difficult economic environment – still manages to present impressive figures in terms of operating profit and cash. In the first quarter of 2009, its global branded sales, which includes consolidated and licensed sales, decreased only slightly by 0.5 percent to €737.7 million on a euro basis and dipped by 3.1 percent in currency-neutral terms.

The licensed business dropped sharply by 41.6 percent, mainly due to the fact that Puma acquired a majority stake in Dobotex, the Dutch licensee for socks and bodywear, in December 2008. The Cat reached revenues from royalties and commission fees worth €5 million in the first quarter compared with €7.1 million in the previous year’s period.

For watches, Puma has signed a license agreement with Mywa, a company founded by Swiss investors that has acquired substantial parts of the watch business of EganaGoldpfeil, including the watch license of Esprit. EganaGoldpfeil was originally a German company, now based in Hong Kong, dedicated to jewelry, leather goods, shoes and accessories. It was Puma’s former licensee for watches, but went belly-up at the end of last year.

Puma’s bottom line for the first quarter showed a huge 94 percent drop in net profit to only €7 million, but that was due to essentially to a provision of €110 million to restructure the company’s retail network, its global organizational structure and its operating processes. These measures, which echo Adidas’s action in these tough times, are designed to generate annual savings of more than €150 million.



Puma’s consolidated sales were up by 3.6 percent in euros and by 0.8 percent on a currency-neutral basis to €697.4 million. Apparel was down by 4 percent in euros while footwear was slightly up by 0.7 percent. Accessories jumped by 64.9 percent.

In terms of geography, sales in the region of Europe, the Middle East and Africa (EMEA) went down by 6.4 percent to €366.1 million, but they were off by only 3.0 percent in local currencies and they generated a slightly improved gross margin of 55.1 percent.

Sales in the Asia/Pacific region increased by 14.8 percent to €153.3 million, but decreased by 1.2 percent in constant currencies. The Americas were in a good shape and grew by 19.7 percent, partially due to currency effects. Total sales in that region stood at €178.1 million, of which €138.7 million came from the U.S., up by 3.4 percent. On a currency-adjusted basis, sales in the Americas improved by 11.5 percent.

Jochen Zeitz, the company’s chief executive, told analysts that the economic slowdown has been felt in China and Japan. In the U.S., Puma did not want to be trapped by the difficult economic environment and reduced certain accounts in American retail. Without giving precise numbers, Zeitz stated that the brand developed better in Eastern Europe than in the West – in spite of currency difficulties in the eastern part of the continent.

Zeitz again was very cautious as far as the outlook for the near future was concerned. His leitmotiv is “cash is king,” so the brand will put its focus on consolidation of its operations rather than on expansion, for example through risky acquisitions. In fact, the operating profit was impressive in the first quarter. It decreased by 9.4 percent, but is still very strong at €114 million or 16.3 percent of the sales. The gross profit was 52.1 percent compared with 53.4 percent last year.

Consolidation means that Puma will continue to look closely at its operating expenses, especially for its own retail operations. Expenses for marketing and retailing remained more or less unchanged in the quarter versus the previous year at €127.2 million. Marketing costs were below last year, partially due to the higher expenses on the European football championship, which was hosted by the Puma-sponsored countries of Austria and Switzerland. Expenses on retailing were higher due to full-year effects. Zeitz pointed out that part of the consolidation plan is to close underperforming corporate stores, but was not willing to give precise numbers on how many doors might be shut down. As of now the growth of the company’s own retail operations is in line with the wholesale business, and on a net basis the number of outlets was even up in the first quarter.

On the cash side, Puma’s figures ensure that the company is well prepared even for stormy times. The net cash position decreased, partially due to the mentioned acquisition and a weaker cash flow in the first quarter, but was still very strong at €204.5 million. As of the end of March, total assets had climbed by 16.4 percent to more than €2.1 billion; the equity ratio reached 56.6 percent compared with 60.4 percent in the last year’s period.