Puma sees weaker first half due to challenging market

Puma on Tuesday said it expects a weak first half of the year in a challenging market for sportswear, but shares in the German sportswear brand climbed as it kept its dividend and stuck to the annual targets it set in January.

Sportswear companies including Adidas, Nike, and Puma, have seen demand weaken as customers battling with inflation cut spending on non-essential goods. "Going into 2024, we see that the market environment remains challenging," Arne Freundt, Puma's CEO, said in a statement.

Shares in Puma rose 1 per cent, however, as the company announced a dividend of 82 cents per share, the same payout as a year ago, and announced a new brand campaign launching in April, the first such campaign in 10 years. In what analysts said was a surprising decline, Puma's sales in the Europe, Middle East and Africa (EMEA) region dropped 5.2 per cent in the fourth quarter to 667.9 million euros, compared to a 9.9 per cent year-on-year increase in the third quarter.

Puma said the slowdown was due to higher inventory levels at retailers in the region. Currency-adjusted sales in the Americas fell by 6.4 per cent to 846 million euros ($918.5 million), hit by a slump in the value of the Argentine peso. The devaluation will continue to impact on profitability in the first half, Puma said. Asia-Pacific, the only region delivering growth in the fourth quarter, saw sales rise 2.8 per cent on a currency-adjusted basis to 468.3 million euros, which Puma said was helped by strong growth in the Greater China region and India while sales in the rest of Asia were held back by consumer sentiment.

Puma reiterated its 2024 forecast for mid-single-digit percentage growth in currency-adjusted sales, and earnings before interest and tax of 620 million to 700 million euros. As the industry struggles with excess stocks, Puma said its inventory stood at 1.8 billion euros by the end of 2023, a decline of 19.6 per cent from a year prior.