German sportswear maker Puma today gave a forecast for 2023 profit with a midpoint below last year's number, expecting some impact from currency effects and higher freight and raw material costs.
Rising materials and freight costs along with a stronger US dollar, inventory markdowns and higher promotion expenses have pressured margins in the sporting goods sector.
The company forecast annual operating profit (EBIT) in a range of €590-670m, with currency-adjusted sales expected to grow in a high-single-digit percentage rate.
"We presume this guidance assumes limited benefit from a reopening of China," Jefferies analysts wrote in a note to clients.
The guidance midpoint of €630m compares to EBIT of €641m Puma reported for 2022, which was up 15% from 2021 but slightly below analysts' estimate of €644m in Refinitiv Eikon data.
Gross profit margin decreased by 420 basis points to 44% in the fourth quarter, the company said, citing an industry-wide increase in promotional activity amid high inventory levels.
"We expect the gross profit margin to be under more pressure in the first half of the year than in the second half," Puma said in a statement.
The company said it expected market conditions in the US and China to normalise this year.
