London - Puma SE cut its full-year forecasts, expecting earnings to decline as much as 37 percent as the German sports-gear maker struggles to contend with the strengthening of the dollar against most major currencies.
Earnings before interest and tax will be 80 million euros ($90 million) to 100 million euros, down from 128 million euros a year earlier, also due to higher marketing expenses and expansion costs, the shoemaker said on Wednesday. The stock fell as much as 7.2 percent, the steepest intraday decline since July 2012.
“The company clearly got caught short in terms of currency movements based on what was hedged and not hedged,” said John Guy, an analyst at MainFirst in London. “However, this shouldn’t derail Puma’s long-term investment plan.”
Puma joins consumer companies such as Associated British Foods and Hennes & Mauritz AB in a struggle with the rising dollar. Chief Executive Bjoern Gulden has been focusing on a recovery programme to revive growth. It includes introducing new shoes for soccer and running and winning retail space for the Puma brand after the stock declined 27 percent in 2014.
Puma said the gross profit margin in 2015 will narrow by 1 to 1.5 percentage points, revising its previous guidance for a “slight increase”.
“The continued adverse developments of foreign-exchange rates during the recent months, particularly the strengthening of the US dollar versus nearly all other currencies, had a significant negative impact on Puma’s gross profit margin and operating result in the first quarter,” the company said. “We do work hard to ‘counter’ these negative currency effects, but do currently not have enough leverage to fully neutralise the impact.”
Its outlook for a “medium single-digit” increase in currency-adjusted sales is unchanged.
Puma’s first-quarter gross profit margin declined to 46.9 percent from 48.5 percent due to the US dollar’s strength compared to currencies such as the Russian ruble, Mexican peso, Brazilian real, Turkish lira and Argentinian peso, the company said.
Bloomberg