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Puma’s operating profit was 236.3 million euros ($252.3 million) for the third quarter, down from 257.7 million a year earlier. Still, the company confirmed its target for annual operating profit between 590 million and 670 million euros.
Shares in Puma dropped 10% in a day earlier this month after analysts said the sportswear company’s third-quarter earnings might miss market expectations due to the currency impact.
The company said it expected “strong improvement in profitability” in the fourth quarter helped by lower marketing, sourcing and freight costs, despite a gloomy backdrop for consumer demand. Shares in Puma were expected to rise around 3%.
“While the market continues to experience significant macroeconomic headwinds and 2023 remains a transition year, we outgrew the market,” Puma CEO Arne Freundt said in a statement.
Currency effects had a negative impact on sales in euro terms, Puma said. The euro was much stronger over the third quarter compared to the same period last year, impacting the translation of dollar sales into Puma’s home currency.
Puma, which makes most of its revenues by selling through multi-brand retailers, said its wholesale business increased by 3.1% in currency-adjusted terms, while sales from its own stores and websites grew by 17.4%.
Puma had taken shelf space from Adidas (OTC:ADDYY) and Nike (NYSE:NKE) when those two brands were pulling back from the wholesale channel to focus on their own stores, UBS analyst Zuzanna Pusz said, but now that the two bigger companies were turning their focus back onto wholesale, competition was more intense.
“Puma is a great company, but I’m just aware of the fact the industry dynamics are changing for them,” she said.
As retailers seek to recover from an inventory glut, Puma said its inventories fell by 20.3% compared to their level on Sept. 30 last year.
($1 = 0.9366 euros)
