Puma, the German sportswear maker, recently announced its second-quarter results and narrowed its outlook for full-year core profit. The company cited expected currency headwinds, higher freight costs, and continued muted consumer sentiment as reasons for the adjustment. Despite these challenges, Puma has been actively working on new marketing initiatives to better compete with industry giants like Adidas and Nike.
One of the key factors affecting Puma’s performance has been weaker consumer demand and excess stocks at sportswear retailers, where the company generates most of its sales. This has put pressure on the company’s profitability and forced them to reassess their full-year projections. Puma now expects its operating profit (EBIT) to fall within a range of 620 million to 670 million euros, compared to the previous range of 620 million to 700 million euros.
As a result of these challenges, Puma’s shares were down 3.5% in early Frankfurt trade. However, the company remains optimistic about its revenue outlook, expecting currency-adjusted revenue to grow in the mid-single-digit percentage range for the full year. This positive outlook is supported by a strong order book for the second half of the year.
In terms of net income, Puma anticipates a change in 2024 that aligns with the operating result. In 2023, the company reported a net income of 304.9 million euros. Despite the challenges faced in the market, Puma managed to achieve a 2.1% increase in currency-adjusted sales to 2.12 billion euros in the quarter. This performance was in line with analysts‘ expectations and was primarily driven by a 9% growth in the Americas region.
However, the Europe/Middle East and Africa region saw a decline in currency-adjusted sales by 4.3% to 817.9 million euros. While there was a return to growth in Europe, this was offset by a decline in Eastern Europe, the Middle East, and Africa following a strong quarter in the previous year. On the other hand, the Asia/Pacific region recorded a sales growth of 1.9%, with Greater China contributing significantly to this growth.
Despite negative currency effects, Puma’s quarterly EBIT was up by 1.6% to 117 million euros. The company’s ability to maintain profitability in the face of challenges demonstrates its resilience and strategic approach to navigating the competitive sportswear market.
In conclusion, Puma’s second-quarter results highlight the company’s efforts to address market challenges and position itself for future growth. By focusing on new marketing initiatives and leveraging its strong order book, Puma aims to overcome the headwinds impacting its profitability and continue to compete effectively with industry leaders.