Puma SE Cuts FY24 Earnings View After Weak Q2; Stock Down

(RTTNews) - Shares of Puma SE were losing more than 12 percent in the morning trading in Germany after the sportswear maker reported Wednesday lower profit in its second quarter amid nearly flat sales, while operating profit improved. The company further trimmed its fiscal 2024 earnings view citing external factors of higher freight costs, changing duties and continued muted consumer sentiment, especially in China, but maintained sales growth forecast.

The performance reflected a challenging environment of increased currency headwinds, stressed supply chains and macroeconomic and geopolitical challenges that are weighing on consumer sentiment around the world.

Looking ahead, Arne Freundt, Chief Executive Officer, said, "With view to our strong orderbook for the second half of the year, we reiterate our sales growth outlook in the MSD range and are narrowing our full-year EBIT outlook range to € 620-670m EBIT in light of these external factors."

For the year, the company continues to expect mid-single-digit currency-adjusted sales growth in the year.

EBIT is now expected to range 620 million euros to 670 million euros, compared to previous outlook of 620 million euros to 700 million euros, while last year's EBIT was 621.6 million euros.

The company projects net income to improve in 2024 in line with the operating result outlook, compared to last year's 304.9 million euros.

In a statement, Puma noted that the development of the operating result and net income is fully in line with its expectations that the second half of the year, particularly in the fourth quarter, will be stronger than the first half.

In the quarter, the company improved wholesale business in all regions, except EEMEA.

With its strong order book for the second half, the company projects further improvement in wholesale business in the coming quarters.

Going ahead, Puma said it will continue to focus on managing short-term challenges without compromising the brand's medium- and long-term momentum. Sales growth and market share gains will take priority over short-term profitability.

In its second quarter, net income decreased 23.8 percent to 41.9 million euros from last year's 55.0 million euros. Earnings per share amounted to 0.28 euro, down 0.37 euro a year ago.

The operating result or EBIT, however, grew 1.6 percent from last year to 117.2 million euros, and the EBIT margin improved by 10 basis points to 5.5 percent.

Gross profit margin improved by 200 basis points to 46.8 percent despite major currency headwinds.

Sales for the quarter edged down 0.2 percent from last year to 2.12 billion euros, while it grew 2.1 percent at constant exchange rates.

On a currency adjusted basis, sales in the Americas region increased 9 percent, and Asia/Pacific region recorded sales growth of 1.9 percent, driven mainly by continued growth in Greater China.

In the EMEA region, sales decreased 4.3 percent due to a decline in EEMEA, while Europe returned to growth.

PUMA's Wholesale business declined 3.3 percent due to the decline in EEMEA. Direct-to-Consumer or DTC business grew 19.5 percent.

Sales in Footwear were flat, while sales in Apparel grew 9.2 percent, but sales in Accessories declined 4.7 percent.

In Germany's XETRA, Puma shares were trading at 36.15 euros, down 12.77 percent.

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