Multinational sportswear company PUMA has reported a gross profit margin of 45.7% in the first half (H1) of fiscal year (FY) 2023, down by 120 basis points (bps) from 46.8% in the same period of FY22.

According to the company, the unfavourable currency, higher sourcing and freight costs and other factors affected the profit margin.

During this period, PUMA’s sales increased by 12.7% to €4.30bn ($4.75bn), driven by the growth in Asia/Pacific and EMEA regions, where sales increased by 26.0% and 25.2%, respectively.

Sales declined 2.7% in the Americas in H1 FY23 due to macroeconomic headwinds and high inventory levels in the trade.

The company’s wholesale business increased by 9.6% to €3.32bn and the Direct-to-Consumer (DTC) business increased by 24.6% to €980.9m.

Sales in owned & operated retail stores and e-commerce also increased by 24.0% and 25.6%, respectively over the period.

PUMA also reported its operating expenses increased by 12.5%. Meanwhile, its operating result (EBIT) decreased by 15.0%.

The company’s net income dropped to €172.3m in H1 FY23, down 16.2% from €205.6m in the same period a year ago.

In the second quarter (Q2) of FY23, PUMA sales increased by 11.1% to €2.12bn.

Sales for its owned & operated retail stores increased 30.4% and e-commerce sales also grew 19.1% in Q2 FY23.

The company’s operating expenses also increased by 6.6% to €843.4m, resulting in the decline of gross profit margin by 170bps to 44.8%.

Its net income also declined by 34.7% to €55.0m in Q2 FY23.

PUMA chief executive officer Arne Freundt said: “On the back of our Q2 results, we are perfectly on track to achieve our full-year outlook in the transition year 2023. PUMA continued to grow by double-digits, demonstrating continued strong brand momentum, despite the volatile environment.

“As the best partner for Wholesale, we worked together with our retailers through elevated inventory levels in the market and successfully normalised our own inventory levels as planned.

“Our strategic priorities Brand Elevation, winning in the US and China are key for PUMA’s future growth trajectory. We are making good progress on all levels and with the announcement of new leaderships for Global Marketing and Mainland China, we have put the required organisational foundation in place.”

For FY23, PUMA expects currency-adjusted sales to grow in the high single-digit percentage range.

The company also expects operating results to range from €590m to €670m.