Shares in PUMA (PUM.DE) tanked on Friday as their newly appointed CEO, Arthur Hoeld, announced on a conference call that the German sportswear brand expected to make a full year loss.
It was never going to be an easy task for the newly drafted PUMA CEO, Arthur Hoeld, who now holds the reigns to one of the biggest cats in the world in the form of a multi-national corporation. On the face of it things don’t exactly look that bad for the German sportswear brand, who boast something like an estimated 4% market share in athletic footwear alone in the USA, a turnover of €8.8 billion, 20,000 employees & global distribution in 120 countries. The thing is there’s two key players when it comes to a giant sportswear company like PUMA and that’s trends & satisfying shareholders. Keeping products on trend, from a lifestyle & performance point of view, whilst also pumping out the profits for shareholders. This seems to be where PUMA have currently fallen short. After launching a cost saving plan following weaker 2024 financials, Trumps increased tariffs in Vietnam, Cambodia & China (where PUMA manufactures the majority of their products) & ever changing trainer trends, PUMA now expects to make a full year loss for its latest financial year.
In a conference call with journalists on Friday, newly appointed CEO, Arthur Hoeld, announced the news with shares in PUMA (PUM.DE) dropping by 16%. US tariffs alone are expected to reduce the German sportswear brands’ gross profit by around €80 million, which is pretty insane when you think about it. As much as brands like PUMA have relied on cheaper manufacturing hubs in South East Asia to maximise profits, a transitional period would of been more beneficial than the 47th President’s unpredictable nature. PUMA, like many other brands affected by the tariffs, are also expected to hike footwear & apparel prices at some point this year, which will no doubt affect consumer spending even more.
PUMA’s headwinds don’t just stop at tariffs though. The German sportswear brand gambled big on the success of late 90s revival silhouettes like the Speed Cat. Not that the Speed Cat wasn’t a “re-release” success, by no means. It just didn’t do the numbers they thought it would. With high inventories and more heavy discounting, brands like PUMA are not blanketed when it comes to consumer spending. Trainer trends are constantly changing, as much as classic gum sole silhouettes remain popular which PUMA really tapped into with the Palermo re-release a few years back, it’s remaining relevant with performance running trainers (currently) which are now becoming some of the most popular “lifestyle” trainers.
To regain its former glory, and this is strictly from a financial perspective for profitability, PUMA needs to unlock its full potential which in theory is a top 5 global sportswear brand. As competition becomes even fiercer in what is probably an overlay saturated market, it really is all about trends & desirability. As Nike pumps in millions to its “Win Now” strategy, PUMA needs to balance out its archive releases with modern day relevancy, as well as claiming a top spot within this whole performance running lifestyle sector. Also don’t forget to subscribe to KULT & follow @kult_recruit to keep up to date with all the latest industry news.
