PUMA launches Phase IV for long-term business plan
27 Jul '05
6 min read
Phase IV Guidance
PUMA will kick-off Phase IV in the World Cup year 2006, which will be marked by a significant increase of brand investments, in particular into marketing, sales (including own retail) as well as product development and design.
Management is targeting double-digit annual sales growth, starting at between 20-30 percent in 2006, and continuing with double-digit average growth over the following four years. PUMA is also expecting to sustain an industry-leading gross profit margin of approximately 48 percent in the long run, with a 50-51 percent margin in 2006 and declining 0.5 percent annually, with the change from today's levels primarily due to category and product mix, as well as the shift that is expected through the regional expansion.
Due to the plan to reinvest parts of the strong profitability to kick start Phase IV, EBIT should initially decline to between 300 and 330 million in 2006, and should boost 2007 to a new record EBIT level, followed by a double digit average growth thereafter.
While absolute profits will be rising in the double-digits, the regional expansion should lower the EBIT margin as a large part of the royalty income will no longer be consolidated without it's corresponding sales as well as due to regional sales percentages shifting. Therefore, EBIT margin is expected between 13 percent and 15 percent in 2006 and around 15 percent thereafter.
With an anticipated tax rate in a range of 30 – 33 percent and minority interest in a range between 0.5 and 1 percent of sales, net earnings should come in between 210 and 230 million in 2006, with double-digit growth in the following years.
marketing@alchempro.com
