Puma Q3 net income falls 24 percent

FRANKFURT - German sportswear company Puma AG said Monday net income fell 24 percent in the third quarter due to a drop in sales, especially for footwear and in its American markets.

Puma, based in Herzogenaurach, said net income amounted to euro68 million ($101 million) in the July-September period, down from euro89 million in the third quarter of 2008.

Revenue for the period was 6 percent lower at euro673 million from euro713 million in the third quarter of 2008.

Puma is the world's third-largest sportswear company after crosstown rival Adidas AG and Nike Inc. of the U.S.

"The business environment has continued to be as challenging as we had expected, which resulted in a decrease in sales and profits," Jochen Zeitz, Puma's chief executive said in the company's report.

"Despite this most difficult market, we generated a profit in all three quarters so far and we expect to be profitable in fourth quarter again. We hope to see first signs of an improving business environment in the run up to the Football World Cup in South Africa, where Puma — through its strong ties with African football — has a home field advantage."

The football World Cup in South Africa next year is expected to add significantly to the company's revenue and earnings in coming months as fans snap up jerseys, balls and even cleats in the run-up and during the monthlong tournament which starts June 11. It is the first such tournament ever to be held in Africa, and Puma supplies 11 African national teams, including Algeria, Cameroon, Ghana and Senegal — the most of any sportswear company.

Despite the weaker results, investors liked the outlook for especially next year. Shares of Puma were more than 4 percent higher at euro233.23 in Frankfurt afternoon trading.

Puma said its revenue fell 10.4 percent on a euro basis in the Americas, while Europe, the Middle East and Africa saw a 5.6 percent decline. Meanwhile, the Asia-Pacific region saw a 1.2 percent increase in revenue.

The footwear division saw a 13 percent decline in revenue and apparel saw a 3 percent decline during the quarter. Revenue for accessories rose 40.4 percent.

For the first nine months of the year, Puma reported a 50 percent decline in net income to euro112 million on revenue of euro2 billion, which was nearly unchanged.

The drop in nine-month profit was partly the result of a euro110 million restructuring charge booked in the first quarter as part of the company's efficiency program.

Puma also said that during the first nine months, operating expenses remained at last year's level of euro753 million. Puma said while marketing and retail expenses were higher in 2008 because of last year's Olympic Games and the European Cup of football, the company saw other costs rise in 2009, including for product development and product design.

Puma is majority held by French luxury goods company PPR.

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