Despite a projected Chinese rebound, German sportswear giant Puma (PUMG.DE) warned Wednesday that increasing expenses and currency impacts would squeeze its profit margins this year.
The athletic goods industry is counting on a Chinese rebound to offset rising materials and freight costs, a stronger U.S. currency, inventory markdowns, and marketing expenditures.
Freundt said the corporation aims to increase the region’s 5% revenue share.
Puma said on Wednesday that Greater China currency-adjusted sales fell 36% year-over-year.
Freundt called the U.S. and China “must-wins” for Puma.
The business predicted 2023 operational profit (EBIT) of 590 million to 670 million euros ($626 million to $711 million) with currency-adjusted sales growth in the high single digits.
Puma announced a 2022 EBIT of 641 million euros.
Jefferies analysts said, “We infer this outlook anticipates modest gain from a reopening of China.”
Puma fell 2% at 1132 GMT.
The business stated that industry-wide promotional activity and excessive inventory levels drove the gross profit margin down 420 basis points to 44% in the fourth quarter of 2022.
Puma stated that currencies, increasing freight rates, and raw material prices would again reduce profitability in 2023.
