Puma SE reported rising sales on demand for sneakers in Europe and its first growth in China in two years, while cautioning that profit margins will remain under pressure from higher costs.
(Bloomberg) — Puma SE reported rising sales on demand for sneakers in Europe and its first growth in China in two years, while cautioning that profit margins will remain under pressure from higher costs.
Revenue climbed 14% to €2.19 billion ($2.41 billion) in the first quarter, the company said Wednesday, slightly ahead of the average analyst estimate. Still, the gross margin narrowed on increased promotional, sourcing and freight costs.
Puma recast its forecast for the rest of the year, saying business may be a bit slower this quarter and should accelerate in the summer and fall. It warned that “recession fears in various markets, persistently high inflation and elevated interest rates are leading to muted consumer sentiment and volatile demand in retail.”
The shares fell as much 4.3% in early German trading, before paring losses. The stock is down about 2% this year.
The robust sales in Europe, its biggest market, and rebounding demand in China helped offset continued troubles in North America, where Puma is struggling to work through a huge inventory of low-price sneakers and apparel.
Chief Executive Officer Arne Freundt needs to try to maintain the fast growth that characterized the tenure of his old boss, Bjorn Gulden, who is now running crosstown rival Adidas AG.
Freundt is looking to boost Puma’s profitability by, among other things, focusing more on selling higher-priced soccer, basketball and running sportswear at upscale stores, especially in the US. Sales in the wholesale business grew 12% to €1.72 billion in the quarter, while direct-to-consumer grew by 22.5%.
(Updates with breakdown of wholesale and retail in sixth, seventh paragraphs)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.