* Q1 sales 820.9 mln eur vs Rtrs poll avg 843 mln
* Q1 net profit 74 mln eur vs poll avg 77.6 mln
* Says China mediocre, footwear market challenging
* Maintains 2012 outlook, sees earning growth in Q2
* Shares flat, ex-dividend
By Victoria Bryan
FRANKFURT, April 25 Germany's Puma
missed expectations with a 5 percent fall in first-quarter
earnings, as the group was hit by wariness among European
consumers and struggled to exploit demand for western brands in
China and lightweight sneakers in the United States.
Along with larger rivals Nike and Adidas,
Puma had enjoyed a strong end to 2011 and analysts said they
were surprised by the results, with sales, margins and profits
all missing average forecasts.
"In comparison with Adidas and Nike, they've been weak on
the product innovation front. They've got a lot of catching up
to do, especially in terms of getting back to the desirability
that the brand enjoyed in the 1990s," BHF Bank analyst Peter
The group said sales rose only 6.1 percent in euro terms in
the quarter, compared with almost 16 percent in the fourth
quarter. Sales in Europe, which accounts for around 43 percent
of turnover, dropped 1.7 percent in euro terms.
Chief Executive Franz Koch said the group would continue to
invest in new products this year and expected a return to
earnings growth from the second quarter.
While Nike and Adidas have enjoyed double-digit sales growth
in China, where increasingly affluent and fashion-conscious
customers have been snapping up European and American brands,
Puma on Wednesday described its performance there as "mediocre"
in the first quarter.
Koch said Puma saw sales growth of less than 10 percent in
China in the first quarter, compared with high double-digit
rates in India, Korea and Japan.
"It's to do with the overall market environment, it's
flooded with inventory from local competitors," Koch told
Local rivals include Li Ning, ANTA Sports
, and Goldrooster, which plans to list in Frankfurt to
drive its expansion.
Koch said Puma would focus on lifestyle, running and
training products in China, and that it hoped the group's
motorsport products would do well there, given the interest of
Chinese consumers in brands like Ferrari, BMW and Mercedes.
RUNNING AWAY WITH IT
Puma, controlled by French luxury goods group PPR,
also said it had found the footwear market challenging in the
first quarter, with sales down 2 percent.
The running category in particular is enjoying a resurgence,
however, and is dominated by trends coming out of the United
States, such as lightweight shoes, a section of the market
virtually created by Nike.
Koch said he was hopeful for the new Archive Light shoe that
has just hit the shops in the United States and added that Puma
intended to launch a new performance footwear line in 2013.
"We want to focus further on the running and training
category in the U.S.," he said. "It's something we've been
addressing but it will take us time to reconnect with those
Overall, Puma saw net earnings drop 5 percent to 74 million
euros ($97.7 million), missing forecasts for 77.6 million in a
Reuters poll, on sales of 820.9 million.
Puma stuck to its outlook for 2012, however, saying new
products and moves to make its European operations more
efficient would help it to achieve sales growth of between 5 and
9 percent and a mid single-digit percentage rise in net profit.
Its shares, which are trading ex-dividend on Wednesday, were
up 0.1 percent at 1023 GMT, compared with a 1.9 percent rise in
the German mid-cap index.