Dharamshala, 24th February: Puma said on Wednesday that it expects sales to increase by at least 10% in 2022, but that profit growth will be limited due to a consumer boycott in China and cost challenges. According to Refinitiv Eikon data, Puma predicts operational earnings of $679-$792 million in 2022, up from 557 million in 2021 but below the 692 million projected by experts.
Puma announced in January that preliminary sales and core profit were higher than projected, with fourth-quarter sales up a currency-adjusted 14 percent. But the company mentioned that higher freight costs and raw material prices, as well as COVID-19 limits, will affect profitability in 2022. COVID-19 forced factories in Vietnam, a major footwear supplier, to close for months last year.
Puma is progressively raising prices to offset rising costs, with the majority of the increase coming in the second half of the year, according to CEO Bjorn Gulden. Gulden predicted that sales in China would fall again in the first quarter and said he couldn’t predict if they would recover again in 2022, noting that Chinese celebrities were still avoiding marketing with Western brands, despite athletes returning.
Since last March, Puma, along with rivals Nike and Adidas, has faced backlash in China for announcing that it will no longer acquire cotton from Xinjiang due to concerns of human rights violations against Uyghur Muslims. Puma’s fourth-quarter sales in China plummeted by 27%, while sales in the rest of Asia/Pacific increased.
Nike stated in December that it was more optimistic about resolving supply chain difficulties in the new fiscal year after exceeding quarterly revenue and profit forecasts despite a 20% drop in Greater China sales.
Despite the fact that these multinational corporations lost many customers in China, their unexpected and unanticipated gain in profit should demonstrate that they don’t need China to make money and that prioritizing human rights over profit confirms their core business principle.
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