The poor outcomes late on Wednesday got here after Adidas reported sturdy gross sales and profitability, highlighting the work Puma nonetheless faces to spice up its model and take an even bigger slice of the $400 billion international sportswear market.
Puma shares ended the day down 22.8% at 32.3 euros, their worst day ever and hitting their lowest stage since February 2018.
Puma has been relaunching sneakers such because the 1999 motor racing-inspired “Speedcat” because it tries to muscle right into a market dominated by Adidas’ retro Samba soccer sneakers, however JPMorgan analysts stated gross sales developments for the Speedcat have been weaker than anticipated up to now.
Newer, fast-growing manufacturers comparable to On Working and Hoka have shaken up the sportswear business, eroding the dominance of Nike , which has seen slowing gross sales, and creating extra competitors for shelf house at prime sporting items retailers.
“This may make traders query what the aggressive benefit of Puma is,” stated Deutsche Financial institution Analysis analyst Adam Cochrane. “If Puma just isn’t actually taking market share, at a time when its greatest competitor (Nike) is weak, is the client not accepting the model premiumisation it’s making an attempt to place by?” Puma has elevated spending on advertising and marketing to spice up its model notion, and the Speedcat is priced at 109.95 euros ($114.44) on its web site, on par with Adidas’ Samba – whereas Puma sneakers have historically been cheaper than Adidas and Nike.
Puma has stated it goals to promote between 4 million and 6 million pairs of the Speedcat in 2025.
Puma’s fourth-quarter gross sales rose 9.8% in currency-adjusted phrases, beneath the 12% progress anticipated by analysts. Web revenue final yr fell to 282 million euros ($293 million) from 305 million, partially resulting from greater curiosity funds on its debt.
The corporate didn’t clarify what led to its weaker than anticipated gross sales. CEO Arne Freundt had stated in November he was assured about demand heading into the year-end procuring season.
The energy of the U.S. greenback poses an issue for Puma, which pays its Asian suppliers in {dollars} however makes an enormous share of revenues in euros.
On the again of the weak revenue, Puma launched a cost-cutting programme aiming to succeed in an earnings earlier than curiosity and tax (EBIT) margin of 8.5% by 2027, up from 7.1% in 2024.
“Whereas we achieved stable gross sales progress in 2024 and made significant progress on our strategic initiatives, we’re not glad with our profitability,” Freundt stated in a press release.
Puma stated it could proceed to make “strategic investments” in its model to spice up progress.
However Barclays analysts stated there was a threat the cost-cutting drive would take administration’s focus away from growing gross sales.
“At this stage, we see extra questions than solutions in regards to the path that Puma will take within the subsequent three years to 2027,” they stated in a observe.
Puma is scheduled to offer extra detailed steerage when it publishes its full-year report on March 12.
