Puma Shares Sink as Consumer Struggles Weigh on Outlook 

The logo of German sports goods firm Puma is seen at the entrance of one of its stores in Vienna, Austria, March 18, 2016. (Reuters)
The logo of German sports goods firm Puma is seen at the entrance of one of its stores in Vienna, Austria, March 18, 2016. (Reuters)
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Puma Shares Sink as Consumer Struggles Weigh on Outlook 

The logo of German sports goods firm Puma is seen at the entrance of one of its stores in Vienna, Austria, March 18, 2016. (Reuters)
The logo of German sports goods firm Puma is seen at the entrance of one of its stores in Vienna, Austria, March 18, 2016. (Reuters)

German sportswear company Puma on Wednesday forecast sales and profits this year below analyst expectations, sending its shares down over 8% to their lowest since 2018, blaming a tougher economic environment and softer demand.

The company said it expected mid-single-digit growth in currency-adjusted sales this year, compared with the 6.6% growth delivered in 2023.

It also projected earnings before interest and tax (EBIT) of 620-700 million euros ($676-763 million), below the consensus forecast of 726 million euros, according to Citi analysts.

"We are surprised and disappointed by the magnitude of the lower guidance (versus) our below-consensus expectations," RBC analyst Piral Dadhania said in a note to investors.

Many retailers are struggling as high interest rates and uncertainty about economic prospects amid wars in Ukraine and the Middle East weigh on consumer spending.

"For 2024, we foresee the geopolitical and macroeconomic challenges as well as highly volatile currencies to persist. This continues to weigh on consumer sentiment and demand, especially in the first half of 2024," Puma's CEO Arne Freundt said in a statement.

After clearing its inventories, however, the company is in a better position than it was at the start of 2023, with an innovative product pipeline and plans to launch its new brand campaign soon, Freundt added.

The comments echo rival Nike, which trimmed its annual sales forecast in December and announced a $2 billion cost-saving program.

For 2023, Puma reported sales of around 8.60 billion euros and EBIT of about 622 million euros, broadly in line with its forecast for high single-digit sales growth and EBIT of 590-670 million euros.

The company said the results were hit by a 54% plunge in the value of the Argentine peso in December.

At 0926 GMT, Puma shares were down 5.7% at 40.5 euros. Shares in German rival Adidas were down 1.6%.



Hermes 2Q Sales Rise 13% on Continued Appetite for High-End Luxury

People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)
People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)
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Hermes 2Q Sales Rise 13% on Continued Appetite for High-End Luxury

People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)
People stand with Hermes shopping bags as they wait at a traffic light in Tsim Sha Tsui, a bustling shopping hotspot, in Hong Kong, China December 5, 2023. (Reuters)

Birkin-bag maker Hermes reported a 13% rise in second-quarter sales on Thursday, demonstrating the continued appetite from wealthy shoppers for its luxury handbags, even as less affluent consumers pull back.

Sales at the French luxury group grew to 3.7 billion euros ($4.02 billion), a 13% organic sales rise that strips out currency fluctuations. The figure was in line with analyst expectations, according to a Visible Alpha consensus.

Operating profit for the first half was 3.1 billion euros, compared to a forecast from consensus provider Visible Alpha for 3.2 billion.

One of the most steady performers in the luxury goods sector -- even as economic conditions worsen -- the French group's results stand out after a string of disappointing earnings updates from peers which have raised investor concern about uncertain prospects for the sector in the coming months.

Hermes' famously classic designs and tight management of production and stock have helped reinforce the label's aura of exclusivity, and CEO Axel Dumas told reporters the company had seen "no big interruption in trends".

However, he said Hermes was seeing slightly less traffic with aspirational clients, which was impacting higher volume products like fashion accessories.