Updated: Puma’s FY25 outlook affected by geopolitical tensions and tariffs

Puma intends to accelerate its profitable growth trajectory, including reaching an Ebit margin of 8.5 percent by 2027 versus 7.1 percent currently, through several initiatives outlined within its “Nextlevel” program. These measures are being taken to increase the brand’s competitiveness, lower its product complexity, and improve its sourcing efficiencies.

The group, which has detailed an FY25 outlook below internal and external expectations, will reduce its global corporate workforce by 500, close unprofitable stores, and improve free cash flow via several means. In total, the actions will cost an estimated €75 million in FY25 but also generate additional Ebit of up to €100 million for the company, which is forecasting a low- to mid-single digit sales improvement and adjusted Ebit range of €520-€600 million before one-time costs, down from a reported €622 million in FY24. Direct-to-consumer sales are expected to increase at a low double-digit rate in FY25 with the wholesale segment coming at flat to up low-single digits on a currency-adjusted basis.

“We want to establish a distinctive brand DNA with consumers to make sure we have a deep, emotional connection with the consumer,” commented Arne Freundt, CEO of Puma SE. “…We said we need to strengthen our performance credibility. Puma at the core is a sports brand, and we need a strong foundation to be a credible sports brand.”

Inside Q4 results

Currency shifted to a tailwind in the holiday period as Puma realized sales gains in all regions, product categories and distribution channels with the EMEA (+14.6%), Dtc (+16.1%), and Accessories (+14.5%) leading the way on a currency-adjusted, percentage basis.

Year-over-year operating income increased by 15 percent to €108.9 million as Ebit soared 139 percent to €65.3 million from €27.3 million. Net income came in at €24.5 million versus €0.8 million as gross margin inched up 30 basis points to 47.3 percent. Year-end inventories were up 11.6 percent from the year-ago period at €2,013.7 million.

Total Q4 group revenues increased by 15.5 percent to €2,289.4 million. Wholesale grew by 6.9 percent on a currency-adjusted basis to €1,525.8 million. Dtc sales jumped by 16.1 percent to €763.5 million with e-commerce up 22.0 percent and owned and operated retail sales up by 12.8 percent. From a product perspective, footwear sales stepped 9.2 percent higher to €1,214.8 million, driven by growth in running in Performance, and by core and kids in the Sportstyle segment. Apparel sales lifted 8.8 percent higher to €736.5 million and Accessories revenues were €338.0 million.

Regionally, EMEA sales came in at €796.5 million, fueled by a 27 percent improvement in EEMEA. Asia/Pacific sales increased 9.5 percent to €50.6 million despite ongoing softness in China where sales still rose by 7 percent on a constant-currency basis. Both North America and Latin America contributed to the 6.5 percent currency-adjusted sales improvement in the Americas to €986.3 million. The Puma brand, meanwhile, is said to be “very strong” in both Mexico and India with “very high unaided brand awareness,” management said.

A closer look at FY24 results

“We had good progress in performance overall,” Freundt commented. “We grew our business overall, but also we gained market share in all the relevant, key categories in Europe.”

Ebit was flat at €622.0 million versus €621.6 million as net income contracted by 7.6 percent to €281.6 million. Annual gross margin grew by 100 basis points to 47.4 percent despite currency headwinds.

Besides making strides in soccer and performance running, a segment Puma only re-entered in 2021, the brand continued to see emerging demand for low-profile footwear that included its iconic Speedcat.

FY24 total revenues rose by 4.4 percent on a currency-adjusted basis to €8,817.2 million from €8,601.7 million with year-over-year Dtc sales gaining 16.6 percent to €2,425.4 million on brand demand and new stores. Ecommerce sales were up 21.1 percent; own retail, up 14.2 percent. Annual wholesale revenues were essentially flat at €6,391.8 million.

By region, the Americas had the highest growth rate at 7.0 percent to €3,536.0 million, followed by Asia/Pacific (+3.8%) with €1,805.5 million in sales. Annual EMEA sales grew by 2.1 percent to €3,475.7 million.

From a product perspective, annual footwear sales increased by 5.4 percent to €4,733.6 million; Teamsports fueled a 3.7 percent improvement in Apparel sales to €2,813.9 million; and Accessories revenues gained 2.0 percent to €1,29.7 million.