Puma’s stock fell 18% as the German sportswear company revealed lower-than-expected fourth-quarter sales and a drop in yearly profit, casting doubt on its capacity to compete with more established rivals Adidas and Nike.
Adidas announced impressive sales and profitability, which underscored the challenges Puma still faces in building its brand and gaining a larger share of the USD 400 billion global sportswear market.
Recently, Puma sales dropped 18% to 34.04 euros, their lowest level since March 2018 and on track for their worst day ever.
Although JP Morgan analysts noted that sales trends for the Speedcat have been lower than anticipated, Puma has been promoting new shoes like the motor racing-inspired Speedcat to establish new trends in a market dominated by Adidas’ vintage Samba soccer trainers.
Nike’s dominance in the sportswear market has been challenged by newer, rapidly expanding brands like On Running and Hoka, which have increased competition for shelf space at leading sporting goods retailers.
In currency-adjusted terms, Puma’s sales in the fourth quarter rose by 9.8%, which was below analysts’ expected growth rate of 12%.
Additionally, the company’s net profit fell from 305 million euros to 282 million euros in 2024, partly due to increased interest payments on its debt. The business did not explain the discrepancy between its actual sales and the anticipated figures.
In November, CEO Arne Freundt expressed confidence in demand as the year-end shopping season approached. Puma started a cost-cutting initiative with the goal of increasing its earnings before interest and tax (EBIT) margin from 7.1% in 2024 to 8.5% by 2027.
The cost-cutting initiative ran the risk of diverting management’s attention from boosting sales, according to Barclays analysts.
“At this stage, we see more questions than answers about the path that Puma will take in the next three years to 2027,” the business said in a note.