* World Cup shirts lift apparel sales
* Footwear sales continue slide
* Company shaves 0.5 pct pts from profit margin forecast
* CEO says confident of 2014 turnaround
(Adds CEO comment, background, detail, share price)
By Emma Thomasson
BERLIN, May 14 Germany's Puma is
banking on this summer's World Cup soccer tournament and a
renewed focus on its technical sportswear to counter currency
effects that prompted the company to trim its profit margin
forecasts on Wednesday.
Early sales of shirts for the eight teams Puma is sponsoring
at the World Cup - including Italy, Chile and Ghana - helped to
slow sliding sales in the first quarter. But like many European
businesses that rely on overseas sales in foreign currencies,
Puma's profitability is being squeezed by the relative strength
of the euro.
Apparel sales rose by a currency-adjusted 3 percent in the
first three months of the year, against a 1.1 percent fall in
the previous quarter. But sales of footwear, which accounts for
almost half of Puma's total, continued to slide, falling by an
adjusted 7.1 percent as a positive reception for the new
evoPOWER soccer boot failed to make up for a decline in its
Puma, which slipped further behind sportswear giants Nike
and Adidas in recent years after a foray into
fashion, is spending heavily on marketing and sponsorship to
restore its reputation for sports performance.
"We know that the repositioning of Puma and the turnaround
of the business will take time, but I am convinced ... that we
have initiated the right projects to make 2014 the start of the
turnaround," Chief Executive Bjorn Gulden said in a statement
after Wednesday's results announcement.
French luxury group Kering, which has gradually
built up a 86 percent holding in Puma since first buying a stake
in 2007, said last month that it would only return to the
acquisition trail in sports and lifestyle once Puma had been
Puma shares, which trade at a big premium to its main rivals
on speculation that Kering could buy out free-float
shareholders, were down 0.4 percent at 1047 GMT.
Rather than pouring cash into marketing during the World
Cup, which Gulden said would be crowded by brands from cars to
credit cards, Puma plans its biggest campaign to date in August,
showcasing athletes including sprinter Usain Bolt, soccer star
Mario Balotelli and golfer Rickie Fowler.
Gulden said the campaign is timed to coincide with the busy
back-to-school season, which should also be supported by
post-World Cup sales, particularly if one of the Puma-sponsored
teams performs well.
"You should not be surprised if there is a Puma team in the
final," he told journalists on a conference call.
Puma also said it will launch a unified site for e-commerce
sales in the United States, Europe and Russia by the middle of
the year and plans to open a new store in Dubai in the fourth
quarter as part of plans to reposition the brand.
The company reiterated a forecast for flat sales in 2014,
with a deal to oust Nike as kit supplier to Arsenal from next
season and the new marketing campaign expected to boost sales in
the second half and offset a first-half fall.
Operating profit for the first three months dropped by a
quarter to 58.6 million euros ($80.32 million), broadly in line
with analyst forecasts, and CEO Gulden said the currency hit was
in the "high single-digit" millions.
Currency volatility could shave off half a percentage point
from Puma's 2014 targets for an operating margin of about 5
percent and net profit margin of about 3 percent, the company
Adidas, which is also suffering from the strong euro, last
week confirmed its target for an operating margin of 8.5 to 9
percent this year. Nike's operating margin in its 2012/13
financial year was 12.86 percent, according to Reuters data.
Puma's sales fell 7.1 percent to 725.7 million euros, but
only dipped 0.5 percent after stripping out the impact of weak
currencies in markets such as Russia, Turkey and Japan, with its
core Europe, Middle East and Africa region up 0.3 percent.
($1 = 0.7296 Euros)
(Editing by Tom Pfeiffer and David Goodman)