Industry News

Puma Sees Q2 Sales Growth on Strength in All Categories

Surfersvillage Global Surf News, 7 August, 2008 : - - Puma’s brand sales, which include consolidated sales and license sales, reached €628.9 million ($983.2 mm) during Q2, a currency-adjusted increase of 5.4% or 1.1% in Euro terms. In the second quarter, consolidated sales grew 11.2% currency-adjusted, or 6.3% in Euro terms to €576.8 million ($901.7 mm).

This shows an improvement as compared to Q1 this year, despite a tough comp basis due to last year’s early shipments. On a currency neutral basis, Footwear was up 7.0% to €325.1 million ($508.2 mm), Apparel improved by 14.6% to €206.3 million ($322.5 mm) and Accessories by a strong 30.3% to €45.4 million ($71.0 mm).

Jochen Zeitz, CEO: ”PUMA’s performance in the second quarter improved at a steady pace, ahead of the Q1 progression. Thanks to our scheduled brand investments, consolidated sales were up 11% in the quarter, driven by a solid growth in all regions and categories. I remain confident in PUMA’s ability to achieve another year of top-line growth despite an ongoing difficult global consumer environment.”

Due to the take-back of the former license market Korea, the licensed business decreased in Q2 by 33.2% currency-adjusted to €52.1 million ($81.4 mm). Based on the licensed sales, the company realized a royalty and commission income of €6.4 million ($10.0 mm) in Q2 versus €8.8 million ($11.9 mm) in the prior year’s quarter.

The gross profit margin further improved by 30 basis points to 52.5% in Q2. After six months, gross profit margin was up to 53.0%, an increase of 80 basis points. In the first half, Footwear margin was up from 52.1% to 53.4% and the Apparel margins increased from 52.1% to 52.5%. Accessories reported a margin of 52.1% versus 53.8% last year.

Total SG&A expenses increased in Q2 by 5.7% to €233.1 million ($364.4 mm). As a percentage of sales, the cost ratio decreased from 40.6% to 40.4% in Q2. The increase in cost ratio is due to continuous investments into the brand according to budget. In Q2, EBIT was up by 2.1% to €62.3 million ($97.4 mm), showing a clear improvement versus the first quarter. The EBIT margin was 10.8% versus 11.2%.

Net earnings/Earnings per share

Net earnings increased by 0.9% to €45.6 million ($71.3 mm) in Q2. The net return amounts to 7.9% versus 8.3%. Earnings per share in Q2 were up 5.7% from €2.82 ($3.80) to €2.98 ($4.66). Inventories grew 7.8% to €419.5 million ($662.8 mm) and receivables were up 4.4%, reaching €473.6 million ($748.2 mm).

Regional Development

Sales in the EMEA region reached €299.6 million ($468.4 mm) in Q2, a currency-adjusted increase of 7.6%. The region now represents 55.3% of consolidated sales. Gross profit margin increased 60 basis points for the first half to 54.5%. Orders on hand were up 3.5% to €576.2 million ($910.3 mm).

Q2 sales in the Americas were up 13.9% currency-adjusted reaching €146.7 million ($229.3 mm). The gross profit margin was at 48.9% for the first half compared to 49.6% last year. The order volume was up by 14.7% to €246.2 million ($389.0 mm). Sales in the U.S. market were down only 0.9% in Q2. Sales development improved versus Q1 2008 and outperformed the trend in the order books. Orders for the U.S. end of June improved versus end of March, being now at $179.8 million or 14.8% below last year.

In Q2, the Asia/Pacific region increased sales currency-adjusted by 17.0% to € 130.5 million ($204.0 mm). The total region accounted for 21.1% of sales in H1, while gross profit margin was strongly up by 240 basis points and reached 53.6%. Orders on hand end of June were up 15.8% and totaled €249.1 million ($393.6 mm).

Outlook 2008

Total orders on hand as of June increased 8.6% currency-adjusted and totaled €1.07 billion ($1.69 bn), representing growth of 3.9% in reporting terms. In terms of product segments, Footwear orders were up by 9.3% to €638.4 million ($1.01 bn). Apparel orders increased 7.0% to €372.1 million ($587.9 mm) and Accessories 11.5% to €61.0 million ($96.4 mm).

Looking ahead, management reaffirmed its guidance of currency-adjusted single-digit sales growth for the fiscal year 2008 despite a continued difficult consumer environment.

www.puma.com

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