Puma SE, the German sports company, is facing a significant decline in its shares after announcing weaker-than-expected earnings forecast for the year. The company attributes this decline to various factors, including the devaluation of the Argentine peso. Puma estimates that its earnings for the year will range from €620 million to €700 million, which is below the average analyst estimate of €784 million.

Over the past year, Puma has encountered challenges such as sluggish demand in the US, the largest sports market globally, and a lack of momentum in its European market. Concerns among investors about the overall weakness in the sector have increased following Nike Inc.’s skepticism regarding consumer demand in China and worldwide. Consequently, shares of Puma’s rival company, Adidas AG, have also experienced a decrease of up to 4.2%.

Puma’s CEO, Arne Freundt, previously highlighted the company’s reliance on fast growth in regions like Latin America to offset declining sales in the US and weak demand in Western and Northern Europe. However, the devaluation of the Argentine peso has impacted this momentum. Puma has implemented hyperinflationary accounting practices to address the situation and reported lower-than-expected results for the fourth quarter. The company’s sales during this period amounted to €1.98 billion, falling short of the average estimate of €2.26 billion.

To compensate for further devaluation of the Argentine peso this year, Puma plans to introduce price increases. In the US market, the company is focusing on higher-priced soccer, basketball, and running sportswear to reduce reliance on cheaper products. Puma anticipates growth in the US by 2024, aided by new collaborations with celebrities such as Rihanna and A$AP Rocky, which have garnered considerable attention.

Additional Information:

For more information about Puma’s earnings forecast, you can visit their official statement on the company’s website: Puma’s Official Statement.

For an in-depth analysis of the challenges faced by the sportswear industry and its impact on companies like Puma, you can read this report: Reuters’ Report on Sportswear Industry.