Puma Lowers Fiscal Year Profit Outlook Due to High Freight Costs and Weak Demand in China – Reuters

By Linda Pasquini and Isabel Demetz

German sportswear company Puma has revised its full-year core profit forecast downward, attributing this adjustment to increased freight costs, currency challenges, and ongoing weak consumer sentiment in China. Following the announcement, shares of Puma briefly fell to their lowest levels since 2018.

To enhance its competitive position against larger rivals such as Adidas and Nike, Puma has introduced new marketing strategies, even as it continues to face adverse currency effects linked to lower consumer demand.

The company now anticipates operating profit (EBIT) to be between 620 million and 670 million euros, a slight reduction from its previous estimate of up to 700 million euros.

CEO Arne Freundt highlighted on a media call that the freight market has become more difficult than initially expected this year, resulting in elevated costs for the latter half. He mentioned additional constraints related to the Red Sea crisis, which have contributed to high-season surcharges and new shipping contracts.

Puma’s shares dropped by 12% to 36.37 euros during early trading, touching a six-year low earlier in the morning.

In its second-quarter report, Puma noted that currency-adjusted sales grew by 2.1% to 2.12 billion euros. However, in the Europe, Middle East, and Africa region, currency-adjusted sales fell by 4.3%. This decline was due to a drop in Eastern Europe, the Middle East, and Africa, which offset modest growth in Europe following a robust prior year.

Analysts at J.P. Morgan commented on the situation, indicating that these outcomes highlight Adidas’ strong performance relative to Puma’s struggles in Europe and uncertainties in China, particularly in footwear.

Despite the overall weaker consumer spending, Puma reported a 7.6% growth in Greater China, primarily driven by online sales. The company anticipates that sentiment in the region will continue to be subdued throughout the year.