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Puma FY15 sales accelerate, profit hit by currency headwinds

By Prachi Singh

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Business |REPORT

Sales at Puma increased 17.1 percent or 11.5 percent currency adjusted to 879 million euros (978.8 million dollars) in the fourth quarter. Full-year sales increased by 14 percent or 6.5 percent currency adjusted to 3.4 billion euros (3.7 billion dollars) mainly driven by footwear and running and training category.

Commenting on the results, Bjørn Gulden, Chief Executive Officer of Puma, said, “The year ended with a strong fourth quarter showing double digit reported growth across all regions and all product categories. We saw improved sell-through both in our owned and operated retail and with our retail partners. Unfortunately the strengthening of the US-dollar versus nearly all other currencies has had a significant impact on both our gross profit margin and our operating expenses and therefore also on our EBIT and net earnings.”

Currency headwinds impact gross profit, earnings

Gross profit margin for the fourth quarter decreased to 42.7 percent due to adverse currency effects and EBIT improved slightly to 11 million euros (12.2 million dollars). The company said, strong sell-through of first Rihanna-inspired footwear ignited Puma’s women’s business. Gross profit margin for the full year decreased to 45.5 percent due to adverse currency effects and EBIT at 96.3 million euros (107.2 million dollars) was in line with guidance. Net earnings amount to 37.1 million euros (41.3 million dollars) and EPS stood at 2.48 euros (2.76 dollars).

In the EMEA region, revenues were particularly high, rising 20.3 percent or 21 percent currency adjusted in the fourth quarter supported by a strong footwear performance in nearly all countries of the region. The Americas region outperformed last year’s sales by 15.4 percent or 7.2 percent currency adjusted. Both North- and Latin America grew. All product segments were positive, with apparel delivering the strongest growth.

Sales in the Asia/Pacific region during the quarter increased 16.2 percent or 8.6 percent currency adjusted against the fourth quarter 2014. China and Oceania were the strongest performers in the quarter.

For the full year In the EMEA region, sales increased by 4.3 percent or 3.6 percent currency adjusted driven by the United Kingdom, France, and Germany with Eastern European countries, the Middle East, and Africa also reporting positive performances. Sales developed particularly well in the Americas region, rising 22.5 percent or 8.8 percent currency adjusted with North- and Latin America contributing to the increase. The Asia/Pacific region revenues increased 17.5 percent or 7.6 percent currency adjusted with higher demand from China and India, while growth in Japan stagnated, affected by the challenging overall economic situation.

Apparel and footwear category sales on a growth track

While footwear and apparel grew during the fourth quarter, accessories sales were broadly flat due to the weaker Golf business. PUMA's Footwear segment achieved growth for the sixth quarter in a row. Sales improved by 16.1 percent or 11 percent currency adjusted with strong gains in the running and training category as well as the successful launch of the first footwear models designed by Rihanna.

With an increase of 21.1 percent or 15.3 percent currency adjusted, the performance in apparel was even stronger, as its training and fundamental products continued to resonate well. Accessories saw a rise of 11 percent or 5.1 percent currency adjusted despite a continued weak Golf environment.

The most important product segment for Puma, footwear, showed sustained growth through the year and had a very good overall performance in 2015, driven by the running and training as well as Teamsport categories. Reported sales increased by 17.4 percent or 9.2 percent currency adjusted. Sales in the apparel segment also improved significantly, owing to strong demand for running and training products. Sales were up 12.9 percent or 6 percent currency adjusted compared to 2014. Sales in accessories improved by 8.5 percent or 1.7 percent currency adjusted during the year.

PUMA's retail sales increased by 9.3 percent currency adjusted, equivalent to 21.4 percent of total sales for the year. Growth was achieved on a like-for-like comparable store basis as well as by an expansion of the retail store portfolio and upgrades in consumer experience with the continued roll-out of the new “Forever Faster” store design at selected locations.

Outlook for the financial year 2016

With major improvements in the product offering, improved sourcing and higher investments in marketing, Puma expects 2016 to be a year of solid sales growth with an initial improvement of profitability. As a consequence, currency-adjusted net sales are expected to increase at a high single-digit rate for the full-year 2016. The gross profit margin is forecasted to be on previous year’s level (45.5 percent), as countermeasures are planned to compensate the negative impact of further foreign currency developments for 2016 compared to 2015.

At the current exchange rate levels, Puma’s management expects that the operating result will improve in 2016 compared to last year. EBIT for the full-year 2016 is expected to come in between 115 million euros and 125 million euros (128 million to 139 million dollars) with net earnings forecasted to improve correspondingly.

“We look forward to a great sports year with the Olympic Games in Rio, Copa America in the USA and the UEFA Euro 2016 in France. We feel we are well prepared with better products, more and better marketing and an even closer co-operation with our retailers,” added Gulden.

Puma