Puma SE, the renowned German sports company, has experienced a significant decline in its shares, plummeting by as much as 8.4%. This drop comes following the release of a weaker-than-expected earnings forecast by the company. Puma stated that several factors, including the devaluation of the Argentine peso, would contribute to earnings ranging from €620 million to €700 million this year. These figures fall short of the average analyst estimate of €784 million.

In the past year, Puma has faced numerous challenges, primarily due to weak demand in the United States, which is the largest sports market globally, as well as sluggish growth in the European market. These factors have been a cause for concern among investors, further exacerbated by the recent doubts expressed by Nike Inc. about consumer demand in China and globally.

The impact of Puma’s announcement has also extended to its rival, Adidas AG, whose shares experienced a decline of up to 4.2%.

Puma’s CEO, Arne Freundt, had previously highlighted in October that the company had relied heavily on rapid growth in regions like Latin America to offset declining sales in the US and weak demand in Western and Northern Europe. Unfortunately, the devaluation of the Argentine peso has adversely affected Puma’s momentum. To mitigate the effects, the company has adopted hyperinflationary accounting practices and reported fourth-quarter results that fell short of expectations, with sales amounting to €1.98 billion instead of the anticipated €2.26 billion.

To counteract further devaluation of the Argentine peso, Puma has implemented a strategy of price increases. Additionally, in the United States, the company is focusing on higher-priced soccer, basketball, and running sportswear, moving away from cheaper products. Puma anticipates that growth in the US will resume at some point in 2024, partly driven by collaborations with various celebrities, including Rihanna and A$AP Rocky.

[Here are two useful links related to the article:]
1. Link 1: This article provides further details on Puma’s weaker-than-expected earnings forecast and the impact on its shares.
2. Link 2: Here, you can find additional insights into the factors contributing to Puma’s decline in earnings and the market reaction.