Esprit dives and so does PumaThursday, 25 October 2012
“Puma posted a moderate increase in sales in the third quarter despite the challenging
business climate in Europe,” said Franz Koch, CEO of Puma SE. “We have taken decisive actions to overcome the issues we are currently facing in particular in Europe. Our Transformation Program 2010-2015 in combination with immediate cost cutting measures and a strengthened product pipeline in Performance and Lifestyle for the next year will provide a solid basis for sustainable and desirable growth.”
The German athletic gear company Wednesday reported a plunge in profit for the third quarter, weighed down by items, amid a challenging business climate in Europe that led to a modest growth in sales. The company predicted lower year-over-year profit for the year.
Puma’s stock was one of the biggest losers within the FashionUnited Top 100 Index, shedding 3.68 percent. The international fashion benchmark index closed up by 2.34 percent. Net earnings plunged over 85 percent to 12.2 million euros, while earnings per share declined to 0.81 euros from 5.45 euros.
Big news though was Esprit Holdings that saw its shares fell almost nearly 17 percent on Wednesday to their lowest in two months after the fashion retailer took the market by surprise and announced an up to 677 million dollars rights issue, raising doubts on the beleaguered company's operational and financial outlook, reported CNBC.
"The scale and timing of this fundraising will likely come as a disappointment to investors and will also raise concerns regarding the underlying operations," Peter Tang, analyst at Mizuho Securities Asia wrote in a research note. Tang, who maintained an "Underperform" rating on Esprit, said the rights issue, if completed, would give the company "the cushion of an improved balance sheet".
Hong Kong markets were closed on Tuesday for a public holiday and Esprit shares fell to as low as 10.36 Hong Kong dollars, the lowest since August 7, after resuming trading on Wednesday.
"A rights issue is a surprise to us," Annie Ling, analyst at Deutsche Bank, wrote in a research note. "Esprit explained that it opted for a rights issue due to a decline in bank borrowing, prompting investors to suspect its bank funding costs have increased or working capital has deteriorated."
However, Esprit was not alone in its fall, as Asian stocks dropped, with the regional benchmark index heading for its fourth straight loss, as the global economic slowdown crimps corporate earnings and after commodities erased this year’s gains, informed Bloomberg.
Japan’s Nikkei 225 Stock Average fell 0.7 percent, reversing gains of as much as 0.3 percent. South Korea’s Kospi Index slipped 0.7 percent and Australia’s S&P/ASX 200 Index dropped 0.8 percent. Taiwan’s Taiex Index lost 0.3 percent.
Finally, bittersweet session for Zumiez, which traded up, closing 1.47 percent below its prior close yet seeing its stock downgraded by Zacks. “We have downgraded our long-term recommendation on Zumiez Inc. ( ZUMZ ) to 'Neutral'. Our view is based on the company's declining comparable store sales transaction in fiscal 2012 so far, except in May.”