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Aug 14, 2009
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Puma CEO expects 2010 record football sales

By
Reuters
Published
Aug 14, 2009

By Eva Kuehnen and Christian Kraemer

BERLIN (Reuters) - Sporting goods maker Puma expects to set a record for soccer product sales next year with the world championship in South Africa, but its CEO said this would still not lift group results from 2009 levels.


Photo: www.puma.com

The world's No. 3 sports good company behind Nike and Adidas

said a recovery in the global economy was needed more than anything to improve the group's performance.

"An improvement of the world economy would be a reason for a better 2010. Soccer plays of course an important part, but soccer alone won't be enough," Chief Executive Jochen Zeitz told Reuters in an interview published on Friday 14 August.

Puma shares trimmed grains after the comments but were still up 5.4 percent at 196.78 euros by 1:05 p.m., easily outperforming a 1.1 percent gain in Germany's mid-cap index.

Zeitz was speaking in Berlin ahead of Saturday (15 August)'s start to the world athletics championships. Puma-sponsored Jamaican Usain Bolt, who set world records for the 100 and 200 metre sprints at the Beijing Olympics last year, will be competing.

Running is an important business for the company, Zeitz said, without disclosing figures. "We want to grow here, and we want to make running cooler."

Sales of soccer-related products account for a double-digit percentage of Puma's overall annual sales. The global market in this category is dominated by cross-town rival Adidas, with a market share of 34 percent, followed by Nike.

Adidas said in June it was well positioned to extend its soccer goods market leadership next year, aiming for sales of clearly more than 1.3 billion euros (1.1 billion pounds).

Adidas equips the national teams of Germany, Argentina and Spain among others, while Puma, majority-owned by France's PPR, kits out teams including Italy, the Czech Republic and Cameroon.

COTTON FROM AFRICA

All three major sports goods makers have responded to the crisis by cutting costs. Puma aims to save up to 150 million euros from 2011 by closing stores, cutting some products and renegotiating contracts with athletes.

"Everything is going according to plan," Zeitz said. "We have consistently implemented measures, reacting to the sensitive market environment," he added.

Puma outperformed larger rival Adidas in the first half of the year with a positive sales trend, but said it saw only slight signs of improvement in the market, whereas Adidas said it had now turned the corner.

Zeitz has said analysts' estimates for a 2009 sales decline of about 2 percent at Puma would be a good guess.

Puma's 2008 sales rose 6.3 percent to 2.5 billion euros.

"It is too early to give the all-clear for the various markets. I don't see a big difference between the regions. The situation in the United States is still difficult," Zeitz said.

Puma still has sales potential of 4 billion euros, he said, but only in the long term due to the economic crisis.

Puma has no plans for acquisitions, and planned to "focus on our own brand," he said.

Higher sourcing costs have burdened margins at all three heavyweights, but Puma still managed to beat its rivals with a gross margin of 51.1 percent in the first half. Zeitz said he hoped to see relief in raw materials prices from 2010 at the latest.

Puma has moved some of its sourcing from Asia to Africa -- it signed up to the "Cotton made in Africa" project for sustainable cotton production -- but Zeitz said it was unrealistic to source or produce everything in Africa.

Puma trades a discount to its peers, at 13 times 12-month forecast earnings. Adidas has a multiple of 15.3 and market-leader Nike 16.2, according to Thomson Reuters StarMine.

(Editing by Will Waterman)

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