Puma AG, the world’s third-largest sporting goods maker, expects trading conditions to remain tough in 2010, a soccer World Cup year, after its earnings fell 44.9 percent last year.
“In light of the ongoing restrictive consumer environment and the difficult economic situation, restrained consumer behavior is expected to continue and this may adversely impact the sales development in 2010,” said Puma chief executive officer Jochen Zeitz during a press conference in Herzogenaurach, Germany, on Wednesday.
Net profits for the 12 months through Dec. 31 decreased to 128.2 million euros, or $178.8 million, from 232.8 million euros, or $324.5 million, Puma said. Revenues dropped 2.5 percent to 2.46 billion euros, or $3.43 billion. Dollar figures are converted at average exchange rates for the periods to which they refer.
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Citing cost savings, Puma said fourth-quarter profits doubled to 16.2 million euros, or $23.9 million, as lower one-off costs for store closures offset weaker sales. Revenues for the three-month period declined 12.8 percent to 489.5 million euros, or $723 million, Puma said.
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The company had unveiled a restructuring plan in 2008 meant to generate improvements in efficiency and cost savings.
“The management team implemented a comprehensive cost-reduction program, which will reduce our initial planned costs significantly on an annual basis. This caused a one-time charge [in 2009] of just under 128 million euros [or $178.5 million], which was used to optimize the portfolio of retail stores, our global organization structure as well as operational processes,” Zeitz said.
A share buyback program may also be in the cards after the company’s free cash flow reached 171 million euros, or $238.5 million, last year. It was the second highest cash flow level in the company’s history, according to Zeitz. Puma has been authorized to acquire up to 10 percent of its own shares until Nov. 12. The company does not exclude future acquisitions, either.
By region, sales for Puma in the fourth quarter fell 10.6 percent in the Americas and 10.8 percent in Europe, the Middle East and Africa combined.They decreased 17.7 percent in the Asia-Pacific region.