Puma expects cost pressure on margins to persist in 2023

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March 1 (Reuters) - German sportswear maker Puma (PUMG.DE) on Wednesday 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 U.S. 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 million to 670 million euros ($626 million to $711 million), 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 630 million euros compares to EBIT of 641 million euros Puma reported for 2022, which was up 15% from 2021 but slightly below analysts' estimate of 644 million euro 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.

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"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 expected market conditions in the U.S. and China to normalize this year.

The stock was down 1.9% in morning trading, having fallen as much as 4% after the market opened.

($1 = 0.9425 euros)

Reporting by Linda Pasquini and Ozan Ergenay in Gdansk, additional reporting by Alexander Hübner; Editing by Milla Nissi and Bernadette Baum

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