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May 14, 2013
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Puma warns of sales decline in 2013

By
Reuters
Published
May 14, 2013

FRANKFURT, May 14 (Reuters) - German sports apparel firm Puma cut its revenue and profit forecasts for this year after sales to customers in Europe and Asia fell in the first quarter.

A 2.3 percent decline in group sales and shrinking profit margins as it cleared excess stock led to a bigger than expected 32 percent drop in first-quarter profit.

Puma, which is controlled by French luxury goods group PPR , said on Tuesday it now expected sales to fall by around 1-5 percent in 2013, compared with previous expectations to meet last year's figure of 3.27 billion euros ($4.3 billion).

It also said it would not meet its target to increase operating profit before special items by a low to mid single digit amount. It expects net profit will still rise compared with 2012, however.

Puma saw net profits drop 70 percent last year and is undergoing its biggest reorganisation in 20 years as it attempts to reverse the trend and get its shoes and clothing back on consumers' wish lists.

PPR has replaced chief executive Franz Koch with Bjorn Gulden, poached from Danish jeweller Pandora and whose experience at shoe retailer Deichmann will be especially needed to improve Puma's footwear results, the group's largest division.

Puma launched the Mobium Elite running shoe at the start of this year and said on Tuesday that sales to retailers and shops in the United States and in the Asia Pacific region had been encouraging.

Overall footwear sales fell 7.8 percent to 373 million euros in the quarter, however. The group's gross profit margin narrowed to 49.1 percent from 51.2 percent, hit by currency effects and as it sold older shoes at a discount to clear stock.

That contrasts with local rival Adidas, which earlier this month reported its highest ever gross profit margin amid strong sales of higher-priced products, including its new Boost running shoe.

Puma is also playing catch-up in producing shoes and kit for money-spinning sports like soccer, where Adidas and Nike are market leaders, and has pulled out of what it sees as less lucrative sports like rugby in Europe and sailing.

For the first quarter, net profit fell 32 percent to a worse than expected 50 million euros and sales eased 2.3 percent to 782 million. Analysts in a Reuters poll had expected on average profit of 67 million euros and sales of 787 million.

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