* Puma falling further behind Adidas and Nike
* Hopes for change after new boss took over July 1
* Q2 sales at 692 mln eur vs forecast 709 mln
* Q2 EBIT 31 mln eur vs poll avg 34.7 mln
* CFO says worst behind company, shares down 2 percent
By Victoria Bryan
FRANKFURT, July 24 German sports apparel group
Puma SE, hoping to revive its fortunes under a new
chief executive, reported a second quarter of falling sales and
profits on Wednesday and said the rest of the year looked
Puma, 83 percent controlled by French luxury goods group
Kering, has fallen behind rivals such as Nike
and Adidas in the market for soccer gear and running
shoes after spending years focusing on its fashion products.
Analysts and investors hope new CEO Bjorn Gulden, a former
Adidas executive and professional footballer who started on July
1, will win back much-needed credibility on the sporting
performance of Puma's footwear and clothing rather than just its
The world's third biggest sporting apparel producer, which
kits out sprinter Usain Bolt and Champions League finalists
Borussia Dortmund, reported a 4 percent fall in sales and a 34
percent drop in operating profit for the second quarter.
That was worse than analysts had expected and sent its
shares down around 2 percent, compared to a 0.4 percent fall for
the MDAX index of medium-sized German companies.
"I think we have the worst behind us, but if we look at the
economic environment and what we're getting from the markets,
then we see that the second half will be quite challenging,"
Chief Financial Officer Michael Laemmermann said.
Poor sales in France, Italy and China, the weak yen in Japan
- its second largest market at around 10 percent of sales - and
high discounts on its shoes resulted in a further fall in Puma's
gross margin to 46 percent from 49.1 percent.
Since the third quarter of 2012, Puma has reported a fall in
the margin - a key measure of success in the sector - while that
at Adidas rose to 50 percent for only the second time in its
history in the first quarter of this year.
FINDING ITS FEET
Gulden, who has been a product manager at Adidas as well as
managing German shoe retailer Deichmann and turning around a
troubled Danish jeweller, was not involved in Wednesday's
results presentations, the norm for German managers who tend to
have 100 days to settle in before talking to media.
He is expected to wait until the group's third quarter
results in November before setting out his plans for the group.
"The main challenge, in our view, will be to recover some
pricing power through sports image legitimacy and innovative
technology," analysts from Raymond James wrote in a note.
Owners Kering have criticised Puma in the past for not
making enough of its sponsorship of Bolt and its soccer heritage
at a time when the sporting reputation of goods is at a premium
as consumers cut back on frivolous fashion purchases.
Shoe sales, which make up almost half of its revenue, fell
7.3 percent in the quarter as the group had to discount its
products more than last year to get them off the shelves. Puma's
footwear sales fell by 7.8 percent in the first quarter, while
Adidas's increased by 3 percent.
"It's too early to say, but I would not be surprised if this
price pressure continues into the first half of 2014,"
Also on Wednesday, economic data showed China's
manufacturing engine lost further momentum in July and the job
market weakened, boding ill for many leveraged to the world's
Puma's sales in the Asia/Pacific region fell by 7.2 percent.
China, already one of its top ten countries for revenue,
remained tough, with an excess of stock on the market,
Laemmermann said, echoing comments by Nike.
Laemmermann said price increases in Japan to mitigate the
weak yen had helped in the second quarter but, unadjusted for
currency effects, overall sales fell 8 percent to 692 million
euros. Analysts had expected 709 million on average.
Puma also reiterated its 2013 forecast for sales to fall by
between 1 and 5 percent for the year as a whole.
Kering will report results on Thursday, while Adidas
will do so on Aug. 8.