Puma Shares Drop After Underwhelming Earnings Guidance, Profit Miss — Update
By David Sachs
Puma shares fell Wednesday after the German apparel company's 2023 net profit and 2024 guidance came in below analyst expectations.
At 1118 GMT, shares in Puma were down 6.7% at EUR40.09 after falling as low as EUR39.37.
Puma's net profit finished 2023 at around 305 million euros ($331.1 million) according to preliminary results, compared with expectations of EUR342 million according to a Factset poll of 21 analysts. The company's earnings suffered from heavy inflation related to the devaluation of the Argentine peso, it said.
Puma expects earnings before interest and taxes this year of between EUR620 million and EUR700 million, versus a consensus of EUR726 million, Citi analysts said in a note.
"For 2024, we foresee the geopolitical and macroeconomic challenges as well as highly volatile currencies to persist," Puma said. "This continues to weigh on consumer sentiment and demand, especially in the first half of 2024."
Puma guided for mid-single-digit currency-adjusted sales growth in 2024. Citi said that slower sales growth expectations are driving the EBIT target rather than the peso's devaluation.
"We expect a strong negative reaction to this print, given the scale of the FY24 downgrade," Citi said.
In the fourth quarter, Puma sales fell by about 9.8%, but by around 4% on a currency-adjusted basis, to around EUR1.98 billion. Sales were higher a year prior at EUR2.2 billion.
Full-year sales reached EUR8.60 billion, up from EUR8.465 billion in 2022. Puma said sales, which grew 8% on a currency-adjusted basis, were broadly in line with its target of currency-adjusted sales growth in the high single-digit percent range.
EBIT finished the fourth quarter at about EUR94 million, compared with EUR41 million a year prior. For 2023, EBIT was around EUR622 million, meeting Puma's target range of between EUR590 million and EUR670 million, but below the 2022 result of EUR640.6 million.
Write to David Sachs at david.sachs@wsj.com
(END) Dow Jones Newswires
January 24, 2024 06:37 ET (11:37 GMT)
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