PARIS — Puma AG looked to be on a winning streak, but investors were disappointed with its second-quarter financial results as earnings declined on brand marketing costs.
The German activewear company scored big with its sponsorship of the Italian soccer team, winner of the World Cup in Germany that took place in June and July, plus 11 other teams in the championship. But marketing costs pushed Puma’s second-quarter earnings down 14.9 percent to 50 million euros, or $63 million. Sales rose 17.7 percent to 620 million euros, or $779 million. Dollar figures are at the average exchange rate.
For the first half of this year, Puma’s earnings fell 4.4 percent to 143 million euros, or $175.8 million. The company posted sales of 1.4 billion euros, or $1.7 billion, a rise of 16.1 percent versus the same period in 2005.
During the first six months of this year, Puma’s footwear sales grew 13.9 percent to 770 million euros, or $947 million; its apparel business jumped 19.2 percent to 469 million euros, or $576.7 million, and its accessories revenues rose 18.9 percent to 118 million euros, or $145 million.
Due to the take-backs of six licenses at the beginning of 2006, the firm generated 50.5 percent of its global revenues in Europe, the Middle East and Africa combined, compared with 67.1 percent last year. The Americas generated 29.7 percent of sales, versus 22.7 percent in 2005, and in Asia, the firm did 19.8 percent of business, in comparison with 10.2 percent last year.
Puma confirmed its full-year sales forecasts of 35 percent sales growth. The company also expects its full-year profit margin to range between 50 and 51 percent.
“By supplying the World Champion Italian national team, along with our overall strong brand visibility at the football World Cup, as well as further outstanding performances in new product categories like golf, Puma was able to strengthen its position as one of the most desirable sports lifestyle brand,” said Jochen Zeitz, chief executive officer of Puma, in a statement. “Combined with half-year results that exceeded expectations, it has been a very successful first six months of 2006 and of Phase IV of our business plan.”
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As reported, Phase IV of Puma’s strategic plan includes aiming to establish Puma as one of the top three brands in the global sporting goods market, with the long-term vision of becoming the most desirable sports lifestyle company, according to Zeitz.
Puma’s stock closed Thursday down 3.12 percent to a unit price of 276.26 euros, or $353.95 at the current exchange rate.