Puma profit slumps as it tackles weak Europe sales
FRANKFURT (Reuters) - Sports apparel maker Puma (PUMG.DE) said it was looking at more cost-cutting measures as it reported third-quarter results below expectations, hit by a slowdown in Europe and China as well as restructuring costs.
Slowing consumer spending in Europe has already prompted profit warnings from car suppliers to luxury handbag makers and food retailers.
Puma, a distant third in the sporting goods industry behind Nike (NKE.N) and Adidas (ADSGn.DE), had warned over the summer that 2012 profit would fall far below last year's level on weak spending in Europe, its biggest market.
Sales in the EMEA region dropped 3.4 percent in the third quarter to 396.7 million euros ($514.3 million), said Puma, whose shoes are worn by sprinter Usain Bolt and soccer player Cesc Fabregas.
The Germany-based group said overall third-quarter sales rose 6 percent to 892.2 million euros and net profit crashed 85 percent to 12.2 million euros. That included restructuring costs of 80 million euros in the quarter.
That compared with analysts' forecast for sales of 906 million euros and net profit of 36.4 million.
Puma has lost ground on rivals by not bringing out as many high-tech running and soccer shoes. While it has promised new innovations for 2013, analysts say it will take Puma a couple of years before it achieves a turnaround.
The company is therefore reducing its product range by 30 percent, trimming organizational structures, closing 80 loss-making stores and scrapping non-lucrative sponsorship deals.
"Further actions are currently under investigation, to be put in place during the fourth quarter of the year," Puma said in a statement on Wednesday, without giving further details.
The group maintained a forecast for 2012 sales to rise by around 5 percent and net profits to fall significantly from last year's 230 million.
Analysts currently expect Puma to report sales up 7 percent to 3.22 billion euros and net profit of 166 million euros, according to Thomson Reuters I/B/E/S.
French luxury goods group PPR (PRTP.PA), which owns Gucci and Yves Saint Laurent, controls an 82.4 percent stake in Puma.
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