STRONG – GROWTH IN SALES & PROFITS

Puma SE (ETR: PUM)

A German multinational corporation that designs and manufactures athletic and casual footwear, apparel, and accessories, with headquarters in Herzogenaurach, Bavaria (Germany), Puma is the third-largest sportswear manufacturer in the world. The company’s January 24 announcement of full-year 2023 preliminary results included sales of €8.6 billion, delivering a currency-adjusted growth of around 6.6 per cent and 1.6 per cent as reported, which fully aligned with the outlook of high single-digit currency-adjusted growth.

The operating income (EBIT) amounted to approximately €622 million, also aligning with the outlook of between €590 million and €670 million. The result aligned with the outlook despite the extraordinary devaluation of the Argentine Peso by 54 per cent in December 2023 and the application of hyperinflationary accounting which, according to IAS 29, requires an adjustment for inflation and currency translation with the year-end currency rate (instead of using the full-year average currency rate) whose impact needs to be fully recognised in the respective quarter. Consequently, the Peso devaluation translated into net income of close to €305 million. Excluding the devaluation, Puma delivered currency-adjusted sales growth above 8 per cent and EBIT above €641 million in 2022.

The devaluation impacted sales in the fourth quarter as well—a 4 per cent currency-adjusted decline and 9.8 per cent reported decline, amounting to €1,982 million versus €2,197 million in 2022, though EBIT increased to €94 million against €41 million in the same quarter last year.

Going forward in 2024, the company expects a mid-single-digit currency-adjusted sales growth and an EBIT in the range of €620 million to €700 million under the assumption that the future devaluation of the Argentine Peso will be fully compensated by corresponding price increases in Argentina.

Skechers USA (NYSE: SKX)

NYSE-listed Skechers USA, Inc, announced fourth-quarter and full-year results for 2023 on February 1, 2024. The LA, Southern California-based Fortune 500 company designs, develops, and markets a diverse range of lifestyle and performance footwear, apparel, and accessories for men, women, and children.

On a full-year basis, Skechers’ annual sales of $8 billion represented a 7.5 per cent increase over 2022, inclusive of a 13.3 per cent increase internationally and a 0.8 per cent decrease domestically, as well as a 24.3 per cent increase in the D2C channel but a 2.8 per cent decrease in the wholesale channel. On a constant currency basis, sales increased by 7.9 per cent. Gross margin remained at 51.9 per cent, increasing by 470 basis points, primarily driven by higher average selling prices and a higher proportion of D2C sales.  

Net earnings were $545.8 million, and diluted EPS were $3.49, increasing by 46.6 per cent over the prior year. Inventory decrease was $292.6 million or 16.1 per cent from December 31, 2022. The store count increased from 4,537 in 2022 to 5,168 in 2023, while $60 million worth of Class A common stock was repurchased.

In the concluding quarter of 2023, total sales of $1.96 billion registered an overall 4.4 per cent increase year-on-year, with D2C growing by 20.3 per cent and the wholesale channel declining by 8.3 per cent. On a constant currency basis, sales increased by 2.8 per cent.

For fiscal 2024, the company believes it will achieve sales between $8.60 and $8.80 billion and diluted EPS of between $3.65 and $3.85. The company believes that the first quarter of 2024 will achieve sales between $2.175 and $2.225 billion and diluted EPS of between $1.05 and $1.10. Further, the company believes that total capital expenditures will be between $350 and $400 million in 2024, inclusive of construction of the company's second distribution centre in China.

MODERATE: GROWTH IN EITHER SALES OR PROFITS

Columbia Sportswear (NASDAQ: COLM)

Portland (Oregon)-based Columbia Sportswear's 2023 results were released on February 1, 2024. The NASDAQ-listed multi-brand global innovator in outdoor, active, and lifestyle products, including apparel, footwear, accessories, and equipment, successfully executed the inventory reduction plan, resulting in the generation of $600 million worth of operating cash flow. Annual net sales increased by 1 per cent (also in constant currency) to $3.487 billion from $3.464 billion in 2022. The healthy growth was seen outside the US, led by China and Europe-direct markets. Gross margin expanded by 20 basis points to 49.6 per cent of sales compared to 49.4 per cent of net sales in 2022. However, net income decreased by 19 per cent to $251.4 million, translating into $4.09 per diluted share (2022: $311.4 million or $4.95 per diluted share). Net cash provided by operating activities was $636.3 million, much higher than $25.2 million in the prior year.

On a quarterly basis, the net sales in Q4, 2023 decreased by 9 per cent (10 per cent in constant currency) to $1.060 million, and net income decreased by 26 per cent to $93.3 million from 2022.

To mitigate the erosion of profitability and improve operational efficiency, a multi-year profit improvement programme targeting $125 to $150 million in annual savings by 2026 is under implementation. In the 2024 outlook, the company’s net sales are expected to decrease by 4 to 2 per cent, resulting in sales of $3.35 to $3.42 billion; gross margin to expand by 100 to 150 basis points to 50.6 to 51.1 per cent; and net income to stay in the range of $207 to $231 million or diluted EPS of $3.45 to $3.85.

WEAK – NO GROWTH IN SALES & PROFITS

GEOX SPA (BIT: GEO)

Biadene di Montebelluna (Italy)-based Geox S.p.A. is among the leading brands in classic and casual footwear listed on the Euronext Milan (GEO.MI) market managed by Borsa Italiana. The company released its preliminary consolidated sales figures on February 1, 2024, along with the net financial position and the 2024 outlook.

Preliminary consolidated sales in 2023 amounted to €720 million, slightly declining by 2.2 per cent compared to the previous year (+0.3 per cent at constant exchange rates). The slight decrease is mainly related to the planned optimisation of the directly operated store (DOS) network, aimed at increasing profitability, together with the adverse weather conditions that induced unsold inventories and a consequent sharp reduction in reorders in the multi-brand channel, both in spring and fall. Actually, DOS on an LFL basis and the online channel sales grew by 3.7 per cent, while the multi-brand channel grew by 0.6 per cent. This growth was achieved thanks to an outstanding fourth quarter in which DOS LFL and online sales increased by 6.4 per cent and 25.9 per cent, respectively.

Management is working on the new 2024-2027 business plan, which will be presented later this year.

Fibre2Fashion News Desk (WE - SB)