Fashion Wire Daily - Paris - Net profit at German sports and lifestyle brand Puma dipped six percent in the opening quarter of 2008, dragged down by weak sales in the company’s core business, footwear.
Puma said net income eased to 90.1 million euros, or $140 million, in the three months ending March 31.
The German sports giant added worldwide branded sales, including consolidated and license sales, fell three percent to 741.2 million euros, or $1.149 billion in the opening quarter. Puma blamed the fall in turnover on “the strength of the euro against most of the related currencies,” citing a common current complaint by export driven European companies.
The company, which is based Herzogenaurach, Bavaria, also said that footwear sales were down by 4.6 percent to 404.1 million euros, or $626 million. Apparel “was almost on last year’s level totaling 246.9 million euros ($382 million),” Puma admitted, without, however, releasing a figure.
Puma, which was acquired last year by French luxury goods conglomerate PPR, said accessories soared by 36.0 percent to 90.1 million euros, or $139.6 million. However, the company’s terse press release did offer any explanation for the increase.
Puma clearly remains ambitious about the future, revealing that it had significantly upped marketing and retail expenses by 20.6 percent to 120.4 million euros, or $186.6 million, due to greater marketing investments and retail expansion. As a percentage of sales, this represents a cost ratio of 17.9% compared to 15.2% in the previous year.
Product development and design expenses fell 11.4 percent to 11.6 million euros, or $18 million, however this should change radically in the coming quarters. In a major blaze of publicity, Puma hired the avant-garde conceptualist UK designer Hussein Chalayan in February to be its worldwide creative director, and he will undoubtedly be given funds to fuel his artistic ideas.
Puma’s cash position also suffered a reverse, as its reserves dropped 11 percent to 357.2 million euros, or $553.6 million, at the end of March. Still, they are nothing to be sniffed at given the label’s global turnover.
