Companies

Puma achieves full year sales growth despite a weak fourth quarter

Feb 29, 2024 Germany

Amid a “volatile environment”, Puma posted currency-adjusted sales growth of 6.6% year-on-year in 2023. Results would have been better had it not been for the devaluation of the Argentine peso in the last quarter, it added

“In a volatile environment that impacted the whole industry, Puma delivered strong growth and profitability fully in line with the outlook. Without the extraordinary devaluation of the Argentine peso, which had a significant one-off accounting impact, our results would have been even stronger. This outcome reflects the strong underlying performance of Puma, and we were only able to achieve this because of our amazing Puma Family and all of its fantastic partners”, commented Arne Freundt, Chief Executive Officer of Puma.

Fourth Quarter Results

In the fourth quarter of 2023, Puma’s sales amounted to 1.98 billion euros, down by 4.0% on a currency-adjusted basis (ca) and by 9.8% as reported, on a comparable basis to the same period of the previous year.

The company’s fourth quarter sales in the Americas region declined by 6.4% (ca) year-over-year to 846.0 million euros, having been “significantly impacted by the devaluation of the Argentine peso”, and in the EMEA region by 5.2% (ca) year-over-year to 667.9 million euros, “mainly due to generally higher inventory levels in the trade, resulting in lower sell-in while the sell-through remained strong”.

Meanwhile, in the Asia/Pacific region, Puma’s sales rose by 2.8% (ca) year-over-year to 468.3 million euros, driven by strong growth in Greater China and India.

In the last quarter of the prior year, the sportswear company’s gross profit margin improved by 290 basis points to 47.0% from 44.0% in the fourth quarter. “Currencies continued to be a strong headwind”, said Puma, highlighting “it was more than offset by tailwinds from fewer promotional activities, price adjustments as well as favourable sourcing and freight costs”.

Despite the Argentine peso devaluation, Puma’s fourth quarter EBIT surged by 133.0% to 94.4 million euros, as compared to 40.5 million euros in the same quarter of 2022, due to its “gross profit margin and strict cost discipline”.

The German-based company posted a net income of 0.8 million euros in the fourth quarter of the previous year, down by 42.3% from a net income of 1.4 million euros in a similar period of 2022.

Full Year Results

In 2023, Puma achieved a sales growth of 6.6% (ca) or 1.6% on a reported basis, reaching 8.61 billion euros, on a comparable basis to the prior year. The Asia/Pacific region led the growth with a sales increase of 13.6% (ca), followed by the EMEA region with a sales increase of 13.4% (ca). Sales in the Americas region declined by 2.4% (ca) due to the devaluation of the Argentine peso.

The company’s full year gross profit margin improved by 20 basis points to 46.3% from 46.1% in 2022, as “currencies and industry-wide promotional activities” headwinds were offset “by price adjustments and favourable geographical and distribution channel mix effects”.

The gross profit margin helped to partially compensate for the impact of higher operating expenses in the company’s EBIT in 2022, which decreased by 3.0% (ca) year-over-year to 621.6 million euros. As a result, Puma’s full year net income amounted to 304.9 million euros, decreasing by 13.7%, on a comparable basis to the 353.5 million euros recorded in the same period of 2022.

Fiscal 2024 Outlook

For 2024, the German-based company expects to achieve mid-single-digit currency-adjusted sales growth and an EBIT in the range of 620 million to 700 million euros, assuming that the future devaluation of the Argentine peso will be compensated by corresponding price increases in Argentina. Net income is expected to change in line with the operating result.

Image Credits: about.puma.com

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