German sportswear company Puma (PUMG.DE) said on Wednesday that it expects second-quarter sales to grow at a low- to mid-single-digit rate, which is below its full-year goal. This is because the company has a lot of inventory and demand is low because inflation is still high.
But the company made more money than expected in the first quarter. The company said that strong growth around the world, especially in Greater China, helped make up for its poor performance in the overstocked U.S. market.
At 10:58 GMT, Puma’s stock was down 3.4%.
Puma, like other consumer brands and retailers like Adidas (ADSGn.DE) and Nike (NKE.N), has been trying to get rid of its extra stock as demand has slowed. This has put pressure on margins in the sports goods industry.
In a media call, the company said that it plans to get its inventory levels back to normal by the middle of the year. However, it believes that currency effects, promotional activity, and raw material prices will continue to hurt its profitability through 2023.
“Fears of a recession in different markets, persistently high inflation, and high interest rates are making consumers feel down and making retail sales unpredictable,” it said.
Chief Executive Officer Arne Freundt said that cleaning up stockpiles and repositioning the brand are top priorities in China, where quarterly sales grew by almost 10%.
He also said that he was optimistic about China in the long run, even though the rise in demand there was not as strong as in the U.S. and Europe after COVID-19 restrictions were loosened.
Analysts at Credit Suisse said in a note from the middle of April that March e-commerce data from China showed that Puma was gaining market share faster than peers such as Adidas and Nike.
In 2022, 5% of the group’s income came from sales in China.
In the U.S., Puma wants to rely less on off-price outlets that sell a lot of goods at a discount and more on growth that is more about quality.
Even though sales in North America fell by 19%, first-quarter sales grew by 14.4% to 2.19 billion euros ($2.41 billion).
Refinitiv Eikon statistics shows that the number was more than the 2.15 billion that analysts had predicted.
Puma stated that its full-year revenue growth will be in the high single digits when adjusted for currency and that its operating profit will be between 590 million and 670 million euros.
($1=0.9103 euros)
