Companies

Puma reduces full year EBIT guidance

Aug 15, 2024 Germany

The German-based company has reported a solid second quarter performance, but has decided to lower its full year EBIT guidance in light of the challenging macroeconomic environment

“With our second quarter operating performance, we fully delivered on our outlook for the quarter and are well on track to deliver on our outlook for the full year. I could not be prouder of our team and our strong retail partnerships, which were key to delivering this result in an environment of increased currency headwinds, stressed supply chains and macroeconomic and geopolitical challenges that are weighing on consumer sentiment around the world”, commented Arne Freundt, Chief Executive Officer of Puma.

Second Quarter Results

In the second quarter of fiscal 2024, Puma’s sales increased by 2.1% on a constant currency (cc) basis to 2.12 billion euros, as compared to the same period of last year. “Currencies continued to be a headwind”, negatively impacting sales in euros terms by approximately 50 million euros (down by 0.2% as reported).

The company’s second quarter sales in the Americas region increased by 9.0% (cc) to 887.5 million euros and in Asia Pacific region by 1.9% (cc) to 411.9 million euros, on a comparable basis to the same quarter in the prior year. In the EMEA region, however, sales decreased by 4.3% (cc) to 817.9 million euros due to a weaker performance in Eastern Europe, the Middle East, and Africa (EEMEA); Europe returned to growth.

Sales from the wholesale business declined by 3.3% (cc) year-on-year to 1.53 billion euros in the second quarter of the current year, mainly due to the EEMEA region (there was a quarter-on-quarter improvement in all other regions). On the contrary, sales from the direct-to-consumer business rose by 19.5% (cc) year-on-year to 587.7 million euros, supported by continued brand momentum and scaled-back promotions.

“With all performance categories as well as sport style core performing very well”, sales from the footwear segment remained flat (ca) at 1.09 billion euros, while sales from the apparel segment grew by 9.2% (ca) to 705.6 million euros, as compared to the second quarter of last year. However, sales from the accessories segment were down by 4.7% (ca) to 314.8 million euros.

In the three months to the end of June, Puma’s gross margin expanded by 200 basis points to 46.8% from 44.8% in the same period of the prior year, as “significant headwinds from currencies were more than offset by a favourable product and distribution channel mix as well as tailwinds from sourcing and freight”.

The sportswear company reported a 1.6% increase in operating profit (EBIT) to 117.2 million euros in the second quarter, as compared to a similar period last year, with the EBIT margin improving 10 basis points to 5.5%.

However, the financial result for the period was negative 42.6 million euros, as compared to negative 23.0 million euros in the second quarter of 2023, due to higher foreign exchange losses and a lower interest result. As a result, net income in the second quarter decreased by 23.8% year-on-year to 41.9 million euros.

Full Year Outlook

For the full year 2024, Puma reaffirmed its outlook of mid-single-digit currency-neutral sales growth. However, given external factors such as higher freight costs, changing tariffs and continued subdued consumer sentiment, especially in China, it has reduced its EBIT outlook to a range of 620 to 670 million euros (previous outlook: 620 to 700 million euros).

Image Credits: designscene.net

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