(Bloomberg) -- Puma SE watered down its annual profit outlook amid higher freight costs and muted consumer sentiment, especially in China.
The German sportswear company’s shares fell almost 13% in early Frankfurt trading after it said earnings this year will probably come in between €620 million ($676 million) and €670 million before interest and taxes. That’s down from a previous forecast of as much as €700 million. Puma shares have now lost more than a quarter of their value this year.
Chief Executive Officer Arne Freundt blamed the narrower profit range on unfavorable currency moves, stressed supply chains and relatively weak consumer sentiment, especially in China.
Now in his second year at the helm, Freundt is hoping to create another era of fast growth at Puma at a time when cross-town rival Adidas AG is one of the industry’s hottest companies.
Puma recently launched its first brand-marketing campaign in a decade, looking to capitalize on big sporting events this summer like the European Football Championship and Paris Olympics. Longer term, the company wants to sharpen its image as a premium sports brand, thanks in part to higher-priced models of football, basketball and running products, especially in the US.
Puma said sales rose 2.1% to €2.12 billion in the second quarter, just shy of analyst estimates. Revenue grew in the Americas and Asia-Pacific regions, but declined by 4.3% in the Europe, Middle East and Africa area, the company said. The results were fully in line with expectations, it said.
Footwear sales were flat in the quarter, while the apparel business expanded by 9%. Puma has been banking in part on strong demand for its retro Palermo sneaker and thin-soled Supercat trainer, which it hopes will allow it to match the progress of Adidas, whose classic Samba and Gazelle shoes have been a hit with consumers.
Industry darling
Long an industry darling, Puma has fallen out of favor with some investors and consumers who appear to prefer Adidas. Bjorn Gulden took over as Adidas CEO in January 2023 after nearly a decade leading Puma.
Legacy sports brands are contending with the rise of smaller rivals like Hoka, New Balance and Switzerland’s On Holding AG.
These brands are gaining market share above all in the performance running space, where they’re appealing to everyone from marathon enthusiasts to people who just want to walk in comfortable shoes.
(Updates with information from fifth paragraph)
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