* Q3 net profit 12.2 mln euros vs poll avg 36.4 mln
* Q3 results include 80 mln of restructuring costs
* Q3 sales 892.2 mln euros vs Rtrs poll avg 906 mln
* Cutting more costs to protect profit
* Shares hit 3-month low, before recovering
By Victoria Bryan
FRANKFURT, Oct 24 Sportswear brand Puma
posted an 85 percent plunge in quarterly earnings, hit
by weak European markets, slowing growth in Asia, and the cost
of a revamp aimed at boosting innovation and future profits.
The German company, a distant third in the sporting goods
industry behind Nike and Adidas, said on
Wednesday it was cutting more costs in a bid to protect
earnings, without giving details.
Consumer firms from car suppliers and luxury handbag makers
to food retailers have issued profit warnings in recent days,
blaming flagging demand in austerity-ravaged Europe and slowing
growth in China, which had previously offset weakness elsewhere.
Puma, whose shoes are worn by sprinter Usain Bolt and soccer
player Cesc Fabregas, had warned over the summer that 2012
profit would fall far below last year's level, as it paid the
price for lagging rivals in bringing out new high-tech running
and soccer shoes and in streamlining its business.
Controlling shareholder PPR, with an 82.4 percent
stake, says Puma has not spent enough on products and needs to
restore profitability, and so the brand has promised more
innovation, as well as steps to reduce its product range by 30
percent, close loss-making shops and end some sponsorship deals.
On Wednesday, Puma booked a larger-than-expected 80 million
euros ($104 million) of restructuring costs in its fiscal third
quarter, hammering net profit down to just 12.2 million euros.
"Puma was a bit behind some other brands in its efficiency
drive and against a worsening background in Europe, they're
having to fight harder to catch up," Silvia Quandt analyst Mark
Josefson told Reuters.
Puma's shares, down 19 percent over the past six months,
dropped to a three month low in early trading, before
recovering to stand up 0.9 percent at 217.45 euros by 1100 GMT.
PPR, which also controls luxury brands Gucci and Yves Saint
Laurent, on Tuesday appointed its group No.2 Jean-Francois Palus
as Puma's new chairman. PPR has been steadily increasing its
stake in Puma over the last year and analysts expect it to use
the low share price to snap up more shares.
WORSE THAN EXPECTED
"I and the board are in agreement that we are not pleased
with Puma's sales and earnings performance at present," Puma
Chief Executive Franz Koch told journalists.
"Given the market environment and Puma's performance,
especially in Europe, we have taken quick measures to reduce the
cost base in short-term," he added, without elaborating on the
Puma said third-quarter sales rose 6 percent to 892.2
million euros, missing analysts' average forecast of 906
million, including a 3.4 percent decline in Europe, its biggest
source of revenue.
"We did not expect brilliant results but these are clearly
much worse than we expected," one Paris-based analyst said.
Silvia Quandt's Josefson said many of the steps being taken
by Puma had already been done by rivals, such as cutting product
lines and consolidating country organisations. Adidas has
already trimmed the number of products it offers by 20 percent.
Puma maintained a forecast for 2012 sales to rise by around
5 percent and net profit to fall significantly from last year's
230 million euros. Some analysts said they would lower their
profit expectations following the third-quarter numbers.
Puma is currently expected to report 2012 sales up 7 percent
to 3.22 billion euros and net profit of 166 million euros,
according to Thomson Reuters I/B/E/S.
While Koch maintained a target to grow sales to 4 billion
euros ($5.2 billion) by the end of 2015, he said Puma was
currently concentrating on profit.