Puma feels pinch of higher wage, commodity costs

Tuesday, 8 March 2011 00:01 - - {{hitsCtrl.values.hits}}

German sportswear maker Puma joined rivals Adidas and Nike in warning of price rises for its products as a result of rising commodity and wage costs.

Puma, the world’s No.3 sporting goods maker after Nike and Adidas, said the rising costs meant net profit would not grow as fast as sales in 2011, and margins would be lower.

Outgoing Chief Executive Jochen Zeitz told reporters the group would definitely increase prices in 2012 and possibly sooner.

Adidas and Nike have both said they are considering price rises to offset the impact of rising commodity prices, such as cotton.

Puma forecast a mid single digit rate of growth for profit in both 2011 and 2012 and a mid to high single digit rate of growth in sales as it reported 2010 results. That compares with 2010 sales growth of 10.6 percent and a jump in net profits of 154 percent to 202 million euros ($272.8 million).

“The results are moderate. The outlook is worse than expected because they’ve decided to invest more in the brand,” said one analyst who declined to be named.

The group, which sponsors the world’s fastest man, Usain Bolt, also decided to keep its dividend at 1.80 euros per share, confounding expectations for an increase to 3.11 euros, according to a Reuters poll. The company said maintaining its dividend at 1.80 euros per share reflected the restatement of the 2009 results after fraud was uncovered at its Greek joint venture.