Puma, citing ongoing geopolitical and macroeconomic headwinds and currency fluctuations to continue for at least H1 of 2024, is forecasting mid-single-digit, currency-adjusted sales growth this year and a corresponding operating profit of €620 million to €700 million this year. The predicted Ebit range represents flat to 12.7 percent year-over-year growth and takes into consideration the devaluation of the Argentine peso that impacted the group’s Q4 results.
Given the expected challenging market conditions, Puma says it will work closely with its retail partners on sell-throughs and “prudent sell-in” in Europe and the US, where H1 results are likely to be softer year-over-year. And persistent negative currency impact is expected to put pressure on H1 profitability. Nonetheless, Puma will launch its biggest brand campaign ever and first in a decade in April, some three months before the Paris Games commence.
Read our Puma company analysis here
Currency impact balanced out in Q4
Group Ebit improved 133.0 percent year-over-year to €94.4 million from €40.5 million in Q4 ended Dec. 31 due to gross margin improvement and strict cost controls. But net income slid by 42 percent to €0.8 million from €1.4 million on a 9.8 percent decline in total sales to €1,982.2 million versus €2,196.6 million. Gross margin increased by 290 basis points to 47.0 percent as fewer promotional activities, price adjustments, and lower sourcing and freight costs offset currency impacts.
| Puma - Income | |||
|---|---|---|---|
| 2023 | 2022 | Change | |
| Q4 (€ million) | |||
| Sales | 1,982.2 | 2,196.6 | -9.8% |
| Cost of sales | 1,051.1 | 1,229.3 | -14.5% |
| Gross profit | 931.1 | 967.3 | -3.7% |
| Royalty and commission income | 11.3 | 11.9 | -5.0% |
| Other operating income and expenses | -848.0 | -938.7 | 9.7% |
| Operating result (Ebit) | 94.4 | 40.5 | 133.1% |
| Financial result | -67.1 | -26.0 | -158.1% |
| Pre-tax | 27.3 | 14.4 | 89.6% |
| Tax | -4.9 | 9.6 | – |
| Net | 0.8 | 1.4 | -42.9% |
| Diluted EPS | 0.01 | 0.01 | 0.0% |
| FY (€ million) | |||
| Sales | 8,601.7 | 8,465.1 | 1.6% |
| Cost of sales | 4,615.1 | 4,562.3 | 1.2% |
| Gross profit | 3,986.6 | 3,902.7 | 2.1% |
| Royalty and commission income | 38.5 | 33.8 | 13.9% |
| Other operating income and expenses | -3,403.5 | -3,295.9 | -3.3% |
| Operating result (Ebit) | 621.6 | 640.6 | -3.0% |
| Financial result | -143.3 | -88.9 | -61.2% |
| Pre-tax | 478.3 | 551.7 | -13.3% |
| Tax | -117.8 | -127.4 | 7.5% |
| Net | 304.9 | 353.5 | -13.7% |
| Diluted EPS | 2.03 | 2.36 | -14.0% |
| Source: Puma | |||
Final period wholesale revenues fell by 8.7 percent on a currency-adjusted basis to €1,335.0 million. Direct-to-consumer sales, meanwhile, increased by 8.0 percent to €627.2 million. On a currency-adjusted basis, footwear sales fell by 5.5 percent to €1,031.9 million despite strong demand for soccer, basketball, golf, and performance-run products. Apparel sales slipped by 5.9 percent to €657.4 million; accessories revenues rose by 7.3 percent to €292.9 million.
Asia with gains in the quarter, EMEA and Americas down
Regionally, Asia-Pacific was the only geography with higher Q4 sales, rising by 2.8 percent on a currency-adjusted basis to €468.3 million. EMEA sales declined by 5.2 percent to €667.9 million due to lower sell-ins caused by higher inventory levels in the trade. Americas’ sales were greatly impacted by the devaluation of the Argentine peso, helping to push the region’s currency-adjusted sales down by 6.4 percent to €846.0 million.
| Puma - Revenues | ||||
|---|---|---|---|---|
| 2023 | 2022 | Change | ||
| Q4 (€ million) | ||||
| Regions | ||||
| EMEA | 667.9 | 727.1 | -8.1% | |
| Americas | 846.0 | 997.6 | -15.2% | |
| Asia-Pacific | 468.3 | 471.9 | -0.8% | |
| Total | 1,982.2 | 2,196.6 | -9.8% | |
| Product divisions | ||||
| Footwear | 1,031.9 | 1,176.8 | -12.3% | |
| Apparel | 657.4 | 736.8 | -10.8% | |
| Accessories | 292.9 | 283.0 | 3.5% | |
| Total | 1,982.2 | 2,196.6 | -9.8% | |
| FY (€ million) | ||||
| Regions | ||||
| EMEA | 3,418.4 | 3,113.8 | 9.8% | |
| Americas | 3,389.9 | 3,685.9 | -8.0% | |
| Asia-Pacific | 1,793.4 | 1,665.3 | 7.7% | |
| Total | 8,601.7 | 8,465.1 | 1.6% | |
| Product divisions | ||||
| Footwear | 4,583.4 | 4,317.9 | 6.1% | |
| Apparel | 2,763.0 | 2,896.3 | -4.6% | |
| Accessories | 1,255.3 | 1,251.0 | 0.3% | |
| Total | 8,601.7 | 8,465.1 | 1.6% | |
| Source: Puma | ||||
Full-year results relatively stable
For FY23, group sales rose by 1.6 percent on a reported basis and by 6.6 percent currency adjusted to €8,601.7 million. Annual operating profit was down by 3.0 percent to €621.6 million, and net income was 13.7 percent lower year-over-year at €304.9 million. Annual gross margin improved by 20 basis points to 46.3 percent, and FY end inventories were down by 19.6 percent at €1.8 billion.
Asia-Pacific sales increased by 13.6 percent, currency adjusted to €1,793.4 million. EMEA sales grew by 13.4 percent to €3,418.4 million, and Americas’ sales fell by 2.4 percent year-over-year to €3,389.9 million due to the devaluation of the Argentine peso. Puma said it had a negative currency impact of more than €400 million for the year.
The brand’s DTC revenues increased by 17.5 percent last year to €2,133.0 million, with owned and operated stores up by 18.0 percent and e-commerce sales lifting 15.0 percent higher. Wholesale revenues, meanwhile, grew by 3.5 percent in FY23 to €6,468.7 million. A breakdown of key segments shows a 12.4 percent annual growth in footwear sales to €4.58 billion; a 0.3 percent contraction in apparel sales to €2.76 billion; and a 3.1 percent expansion in accessories to €1.26 billion.
Focus on US and China in 2023 pays off
Puma’s key FY23 strategies focused on driving its brand elevation, increasing its product focus, and improving its distribution quality as it put additional emphasis on the US and China, two countries where the company sees sustainable long-term growth for the brand. In the US specifically, the group worked on cleaning up inventory, reducing its dependency on off-price channels, and strengthening its organization. In China, meanwhile, an estimated 40 percent of products will be designed locally in 2024, and 80 percent will be manufactured in the country.
Read our Puma company analysis here
