German sports company Puma SE experienced an 8.4% decline in its stock value after announcing lower-than-expected earnings for the year. The projected earnings for 2024 range from €620 million to €700 million, falling short of the €784 million average estimated by analysts. Factors contributing to the weakened outlook include the devaluation of the Argentine peso.
Over the past year, Puma has grappled with subdued demand in the US, the world’s largest sports market, and sluggish momentum in its European home market. The company had previously relied on robust growth in regions like Latin America to counterbalance declining sales in the US and weak demand in western and northern Europe.
Puma’s Chief Executive Officer, Arne Freundt, had previously highlighted the company’s focus on higher-priced soccer, basketball, and running sportswear in the US. Despite this, the Argentine peso’s devaluation has impacted Puma’s momentum, leading to a shift in accounting practices and fourth-quarter results below estimates.
To mitigate the impact of further peso devaluation, Puma plans to implement price increases. The company had earlier expressed optimism about resuming growth in the US in 2024, supported by collaborations with celebrities like Rihanna and A$AP Rocky. The challenges faced by Puma have also influenced its rival, Adidas AG, which saw a 4.2% decline in shares following Puma’s announcement.
