PUMA’s 2012 Sales meet Expectations.Transformation and Cost Reduction Program impact Profitability.

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    • PUMA’s 2012 Sales meet Expectations.Transformation and Cost Reduction Program impact Profitability.
    mercoledì 13 febbraio 2013

    PUMA’s 2012 Sales meet Expectations.Transformation and Cost Reduction Program impact Profitability.


    Herzogenaurach, February 14, 2013


    2012 Fourth Quarter Highlights


    •PUMA’s consolidated sales climb by 11.7% in Euro terms to € 804.7 million.
    •Gross profit margin declines to 44.6% due to inventory clearance.
    •EBIT before special items falls slightly to € 42.8 million.
    •Special items of € 98.2 million booked in the quarter.
    •Net earnings come in at € -42.6 million, impacted by special items.


    2012 Full Year Highlights


    •PUMA’s full year consolidated sales rise by 8.7% in Euro terms to just under € 3.3 billion.
    •Gross profit margin abates to 48.3%.
    •EBIT before special items softens by 12.8% to € 290.7 million.
    •Special items of € 177.5 million caused by Transformation and Cost Reduction Program, Spain Arbitration and restructuring of businesses in Greece, Cyprus and Bulgaria.
    •EBIT including special items totals € 113.2 million.
    •EPS amount to € 4.69 after € 15.36 last year.

    Key sales figures at a glance(see tables inthe press release)

    Outlook for the Financial Year 2013


    •Transition Period defined within our strategy extended into 2013
    •Launch of “The Nature of Performance” brand platform and new product innovations to revitalize Performance categories
    •Management expects 2013 sales unchanged from the 2012 level
    •Management envisages an increase in EBIT before special items of low- to mid-single digits and a significant improvement of net earnings


    “Despite a continuously challenging market environment, particularly in Europe, PUMA delivered a strong sales performance in the fourth quarter, enabling us to meet our sales projections for the full year of 2012,” said Franz Koch, CEO of PUMA SE. “We have completed defining the scope of PUMA’s Transformation and Cost Reduction Program, and will continue with the implementation of all measures throughout 2013 to improve the company’s profitability. I want to reiterate that it is not our priority to push for sales growth at any cost, but instead focus on improving desirability for the PUMA brand.”

    Strong performances in Asia and North America give impetus to PUMA’s Fourth Quarter Sales Growth


    PUMA delivered a strong sales performance in the fourth quarter of 2012. Boosted by double-digit sales growth in Asia and North America, PUMA’s consolidated sales increased by nearly 12% in Euro terms or 8.7% currency adjusted to € 804.7 million from October 1 to December 31. The numbers were supported by the performance of Cobra PUMA Golf, with its products resonating exceptionally well with consumers.


    Sales Performance by Segment
    All of PUMA’s product segments grew in the fourth quarter of 2012. Footwear was up by 8.6% in Euro terms to € 367.9 million. On the Performance side, PUMA’s Faas footwear family continued to appeal to consumers while the PUMA Suede range fuelled sales in PUMA’s Lifestyle footwear business.


    Apparel climbed by 15.2% in Euro terms to € 316.6 million after increasing demand for Fitness & Training gear. Accessories rose by 12.3% in reported terms to € 120.1 million driven by our US joint ventures Janed and Wheat as well as our Cobra PUMA Golf business.


    Sales Performance by Region
    While PUMA’s sales increased in all regions, performance in the Asia/Pacific region was exceptionally satisfactory during the fourth quarter. Sales rose by 16.2% to € 246.7 million while PUMA expanded in virtually all markets. Japan and India in particular excelled on the back of demand for evoSPEED Apparel products. Seasonal factors also played a part, with winter collections gaining traction with consumers, especially PUMA branded duffel coats and parka collections in Korea, China and Japan.


    PUMA was also able to reverse the slight declines from previous quarters in the EMEA region, with sales rising by 7.0% in Euro terms to € 253.4 million. This performance was supported by strong growth in Germany, Sweden and Switzerland delivering satisfying growth rates. PUMA’s Lifestyle footwear ranges sold well, especially the PUMA Suede in developed countries as well as our Motorsport collections in emerging markets.
    In the Americas, PUMA continued to increase sales at a favorable rate, improving by 12.2% in reported terms to € 304.5 million. This growth was driven mainly by the Cobra PUMA Golf business as well as by undiminished demand for Fitness, Lifestyle and Motorsport products.


    Sales Performance Retail
    PUMA’s retail business increased by a significant 23.0%, with the company operating 60 additional stores when compared to the fourth quarter of last year. As in the three previous quarters, our comparable store sales developed positively, while E-commerce sales rose by 23.4% over the same period.


    Margin, Expenses and Profitability
    PUMA’s fourth quarter gross profit margin declined from 46.7% to 44.6%. The Footwear margin fell sharply from 46.6% to 41.8%, due to inventory clearances during the quarter and unfavorable hedging rates as well as a shift in the regional mix. The gross profit margin for Apparel, however, improved from 45.9% to 46.6% and Accessories declined from 49.0% to 48.0%.


    Operating expenses in the fourth quarter continued to rise, by 10.0% from € 292.3 million to € 321.5 million. This was equivalent to 40.0% of sales and an OPEX ratio improvement from 40.6% in 2011. The absolute increase in operating expenses is mostly attributable to higher marketing and retail expenses on the back of our increased retail portfolio as well as continuing IT and supply chain infrastructure improvements.


    The EBIT before special items fell by 11.2% to € 42.8 million in the fourth quarter from last year’s € 48.1 million and also as a percentage of sales, from 6.7% to 5.3%.


    In addition to the special items of € 79.3 million reported in the third quarter, PUMA recorded a further € 98.2 million in special items for the last three months of 2012. These additional items consist of the arbitral award in December related to the trademark rights in Spain, the restructuring of our distribution set-up and the closure of our subsidiaries in Greece, Cyprus and Bulgaria, as well as the streamlining of our product and endorsement portfolio.
    The fourth quarter financial result further improved from € -8.9 million to neutral, largely as a result of a decline of foreign exchange impacts.

    EBT in the fourth quarter fell from € 39.3 million to € -55.4 million. Net earnings consequently also declined from € 33.1 million to a loss of € -42.6 million in the quarter and Earnings per share followed suit, reduced from € 2.21 to € -2.85. These drops all stem from the special items booked in the quarter.


    PUMA reaches 2012 Full Year Sales Target


    2012 was an exceptional year for PUMA in many ways. The Football Euro Cup in June, the conclusion of PUMA’s second Volvo Ocean Race in July and the Summer Olympics in August turned 2012 into a year full of major sports highlights. These events provided the perfect platform for PUMA to generate global brand visibility and desirability.


    In terms of product, 2013 will be a pioneering year for PUMA, as the company re-energizes its Performance positioning through the introduction of a new cross-category brand platform: The Nature of Performance. The Nature of Performance unifies all of PUMA’s performance categories with a consistent voice, look and feel and serves as the inspiration for a collection of innovative new products in the Football, Running, Training, Fitness and Golf categories.


    PUMA’s management began to implement the company’s Transformation and Cost Reduction Program throughout the second half of 2012, laying the groundwork for substantial financial improvements going forward. The program entails the set up of a new business model in Europe by reducing the number of reporting entities from 23 countries to seven areas as well as a strong European management paradigm. The areas DACH (Germany, Austria, Switzerland), IBERIA (Spain, Portugal), UKIB (UK, Ireland and Benelux), SCANDINAVIA (Denmark, Finland, Norway, Sweden), EASTERN EUROPE (Estonia, Latvia, Lithuania, Poland and Slovakia, Czech Republic, Hungary), FRANCE and ITALY have all been implemented.


    The Transformation and Cost Reduction Program includes the closure of approximately 90 unprofitable stores, mostly in established markets, which has also begun. However, PUMA will continue to open new stores in selected profitable locations throughout 2013, primarily in emerging markets. PUMA expects to be operating 540 stores at the end of 2013 compared with 590 stores at the end of 2012.


    PUMA has also assessed its sponsorship portfolio and terminated endorsement contracts that are either unprofitable or are no longer part of PUMA’s core categories going forward. Within this context, PUMA has decided to focus its activities in the Sailing category on endorsing the America’s Cup and ORACLE TEAM USA for 2013. Beyond 2013, PUMA will cease the production of Sailing products, and focus instead on its Outdoor business, for which Sailing has served as the perfect springboard. PUMA has also decided to exit all European Rugby activities, including the endorsement of the Irish Rugby Football Union beyond the 2013/14 season.


    Full year sales increase to almost € 3.3 billion
    Consolidated sales for the Full Year climbed 8.7% in Euro terms or 4.6% currency adjusted to € 3,270.7 million. With this record result, PUMA achieved its sales target for the full year.


    Sales Performance by Region
    While sales in EMEA softened by 0.8% in Euro terms to € 1.3 billion due to a weaker performance in Western Europe, there were strong performances in Germany, Russia and Turkey in 2012. The Americas delivered a satisfying performance, including North America, Mexico and Argentina, increasing in Euro terms by 16.6% to € 1.13 billion. Asia/Pacific was equally strong, rising by 15.3% to € 841.7 million, supported by good numbers in Japan and India in particular.


    Sales Performance by Segment
    In terms of segments, Footwear grew 3.6% in Euro terms to € 1.6 billion. Apparel rose by 11.2% to € 1.15 billion, while Accessories posted an impressive 20.7% increase to € 523.6 million also bolstered by consolidation effects of the new joint ventures.


    Retail sales climb by € 109.0 million
    Sales in our owned and operated retail outlets rose by 21.2% in 2012 to € 623.9 million, an increase of € 109.0 million from 2011. This is due in part to the expansion of our retail base compared to the end of 2011. As a percentage of total turnover, retail sales rose from 17.9% to 19.1%. E-commerce also posted a gain, up 16.5% for the year.


    Gross profit margin eases to 48.3%
    For the full year, PUMA’s gross profit margin moved down from 49.6% to 48.3% in 2012. This was due to a combination of factors, most notably inventory clearance, the regional mix and also continued input cost pressure in the form of wage inflation in the Far East. The Footwear margin declined from 49.1% to 46.5%. Apparel rose slightly, from 49.6% to 49.8% whereas Accessories fell, from 51.6% to 50.5%.


    Operating expenses
    PUMA’s full year operating expenses rose by 11.0% in 2012, from € 1,177.8 million to € 1,307.5 million, slightly ahead of and equal to 40.0% of sales. Marketing and Retail rose by 10.7% to € 609.3 million, and also slightly as a percentage of sales to 18.6% after 18.3% last year, caused by supporting a double event year and the increasing number of stores operated by PUMA. Other Selling Expenses rose 11.4% to € 431.1 million. Similarly, Research, Design and Development costs rose 10.3% to € 84.9 million as PUMA continues to emphasize its product pipeline. General and Administrative Expenses were up 5.0% to € 205.0 million. Despite this, the expense ratio declined from 6.5% to 6.3% in 2012 due to cost saving measures. The Company reported other operating income of € 22.9 million compared to € 32.2 million in 2011.


    Earnings before special items
    EBIT before special items declined 12.8% to € 290.7 million as a result of higher costs and lower than expected margins. As a percentage of sales this is equal to 8.9% for the year compared to last year’s 11.1%.


    Special Items
    PUMA recorded € 124.9 million in special items that are related to the Transformation and Cost Reduction Program. These have been incurred mainly by restructuring the European region, optimizing the retail portfolio, adjusting the product and endorsement portfolio, and reorganizing our global functions and local subsidiaries.


    As announced on 20 December 2012, the former Spanish distributor and license holder Estudio 2000 S.A., who owned several PUMA trademark rights in Spain, was obliged to vest these to PUMA in accordance with the award of the arbitration panel. According to this ruling, the transfer of the trademark rights is subject to a one-time payment of € 42.2 million to Estudio 2000 S.A., which led to a one-off expense of € 24.6 million in 2012.


    For Greece, Cyprus and Bulgaria, PUMA has appointed Sportswind, a local distributor, to take over PUMA’s business activities in these countries, as PUMA wants to focus its efforts, initiatives and investments on its key strategic markets. The distribution agreement should reduce PUMA’s business risks in these markets substantially while at the same time improve its sales. PUMA will close its own operations in due course in these three markets. The restructuring of the aforementioned distribution and operations resulted in additional one-time costs of € 28.0 million.


    Operational result after Special Items
    The EBIT after special items for 2012 was € 113.2 million, or 3.5% as a percentage of sales.


    The financial result for 2012 improved significantly and was € -0.9 million compared to € -12.8 million in 2011 due to lower foreign exchange impacts in PUMA’s financing activities.


    Full year EBT was therefore € 112.3 million, or 3.4% of sales, while the tax ratio remained stable at 28.9%.


    As a result of our Transformation and Cost Reduction Program in 2012, net earnings for the financial year 2012 were € 70.2 million, compared to € 230.1 million last year and EPS was therefore equal to € 4.69 and down from last year’s € 15.36.


    Net Assets and Financial Position


    The equity ratio rose from 62.2% to 63.1%, which indicates continued improvement in our capital base, despite the lower net earnings in 2012.


    Working Capital
    PUMA’s overall Working Capital increased by 16.8% to € 623.7 million, due in particular to a decline of working capital related liabilities at the balance sheet date. On the asset side, testament to PUMAs strict management, Inventories rose only slightly, by 2.9% to € 552.5 million and Trade receivables actually decreased despite the rise in sales, down 4.9% to € 507.0 million.


    Cashflow / Capex / Cash Position
    Free cashflow before acquisitions for the full year improved by 37.1% from € 61.0 million to € 83.5 million in 2012 mainly due to lower tax payments. With regards to our Capex, PUMA’s outgoings increased by 14.1% to € 81.2 million related to store openings and IT investments. Payments for acquisitions more than doubled to € 91.7 million, consisting for the most part of PUMA’s purchase of all outstanding Dobotex shares at the beginning of the year. As a consequence, the net cash position decreased by 12.1% to € 363.2 million.


    The Administrative Board will propose at the Annual General Meeting on May 7, 2013, that a dividend of € 0.50 per share (€ 2.00 in the previous year) be paid for the financial year 2012. This is a result of the reduced earnings caused by the special items undertaken under the Transformation and Cost Reduction Program, the restructuring of the distribution in southern east European countries and the Arbitration ruling in Spain.


    Share buyback
    The company did not buy back any of its own shares throughout the year, including the fourth quarter of 2012. As of the balance sheet date, PUMA owned 143.185 of its own shares, equal to € 32.2 million.




    Management expects that PUMA’s sales in 2013 will remain at a level consistent with that of 2012. This is due to the fact that the implementation of the Transformation and Cost Reduction Program will continue throughout 2013, making it a transitional year before PUMA will once again generate desirable, profitable sales growth. However, as PUMA’s Transformation and Cost Reduction Program is geared towards improving the company’s profitability, management envisages an increase in EBIT before special items in the low- to mid-single digits while net earnings should improve significantly.


    Rounding differences may be observed in the percentage and numerical values expressed in millions of Euro since the underlying calculations are always based on thousands of Euro.


    Media Relations:
    Kerstin Neuber - Corporate Communications - PUMA SE - +49 9132 81 2984 - kerstin.neuber@puma.com


    Investor Relations: Carl Baker – Finance - PUMA SE - +49 9132 81 3188 – carl.baker@puma.com


    Notes to the editors:
    •This press release and financial reports are posted on www.about.puma.com.
    •PUMA SE stock symbol:
    Reuters: PUMG.DE, Bloomberg: PUM GY,
    Börse Frankfurt: ISIN: DE0006969603– WKN: 6969603


    Notes relating to forward-looking statements:
    This document contains forward-looking information about the Company’s financial status and strategic initiatives. Such information is subject to a certain level of risk and uncertainty that could cause the Company's actual results to differ significantly from the information discussed in this document. The forward-looking information is based on the current expectations and prognosis of the management team. Therefore, this document is further subject to the risk that such expectations or prognosis, or the premise of such underlying expectations or prognosis, become erroneous. Circumstances that could alter the Company's actual results and procure such results to differ significantly from those contained in forward-looking statements made by or on behalf of the Company include, but are not limited to those discussed be above.




    PUMA is one of the world’s leading Sportlifestyle companies that designs and develops footwear, apparel and accessories. It is committed to working in ways that contribute to the world by supporting Creativity, SAFE Sustainability and Peace, and by staying true to the principles of being Fair, Honest, Positive and Creative in decisions made and actions taken. PUMA starts in Sport and ends in Fashion. Its Sport Performance and Lifestyle labels include categories such as Football, Running, Motorsports, Golf and Sailing. Sport Fashion features collaborations with renowned designer labels such as Alexander McQueen, Mihara Yasuhiro and Sergio Rossi. The PUMA Group owns the brands PUMA, Cobra Golf and Tretorn. The company, which was founded in 1948, distributes its products in more than 120 countries, employs more than 10,000 people worldwide and has headquarters in Herzogenaurach/Germany, Boston, London and Hong Kong. For more information, please visit http://www.puma.com


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