Puma sales dip in 2023 due to Argentinian peso devaluation
The sportswear company admitted that the peso devaluation and its hyperinflationary accounting treatment led to a significant gap between the underlying operating performance and the recorded financial performance
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Puma achieved full-year currency-adjusted sales growth of 6.6%, with preliminary 2023 sales of €8.6bn (£7.3bn) due to the devaluation of the Argentinian peso by 54% in December 2023.
The company said that the peso devaluation and its hyperinflationary accounting treatment led to a significant gap between the underlying operating performance – currency-adjusted sales growth of above 8% and EBIT above last year of €641m (£548.7m) – and the recorded financial performance – currency-adjusted sales growth of around 6.6% and EBIT of €622m (£532m).
Despite this, Q4 EBIT was strong with €94m (£80m) compared with €41m in 2022, and “fully in line with expectations”, driven by an improved gross profit margin and strict cost discipline. However, Q4 sales declined by 4% to €1.9bn (£1.6bn).
Arne Freundt, CEO of Puma, said: “The accounting treatment of the hyperinflationary economy of Argentina and its significant devaluation of the Argentine peso mid December resulted in an extraordinary impact on fourth quarter and financial year results for 2023.
“Due to the magnitude and timing of this currency effect, we could not fully compensate for the entire impact at the year-end. With a strong fourth quarter operating result we achieved a full-year EBIT absolutely in line with expectations as well as a significant improvement in the Free Cash Flow.”
For the year ahead, the company expects a mid-single-digit currency-adjusted sales growth and an EBIT in the range of €620m (£530m) to €700m (£599m).
Freundt concluded: “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. While we cannot change these external factors, we continue to stay 100% focused on elevating the brand and bringing exciting product newness to the market.
“We are in a better position at the start of 2024 than we were at the start of 2023: we have cleared our inventories, we have a product pipeline with exciting product newness and innovations and we will launch our new brand campaign soon.”
