PUMA Announces Job Cuts and Warns of Uncertain U.S. Consumer Demand
Disappointing Quarterly and Annual Forecasts
PUMA on Wednesday announced job cuts and warned of uncertain U.S. consumer demand as the German sportswear group’s shares slumped 23% in the wake of disappointing quarterly and annual forecasts issued a day earlier. The grim outlook, which follows weak quarterly sales and annual profit announced in January, has raised concerns over Puma’s ability to compete with bigger rivals Adidas and Nike while fending off newer, fast-growing brands such as On Running and Hoka.
Economic Uncertainty Affects Consumer Spending
Chief Executive Arne Freundt said Puma’s target consumers in the United States were not spending due to economic uncertainty. "February was bad. March has started off a bit better," he said at a press conference. Chief Financial Officer Markus Neubrand announced plans to cut 500 jobs worldwide and close some unprofitable stores as part of a cost-cutting plan.
Diversifying Production Away from China
Asked about the potential impact of U.S. import tariffs, Puma’s management confirmed that Chinese production made up about 10% of shoe imports into the United States, down from 30% in the past. The company was urging suppliers to diversify production away from China to countries including Indonesia, they said.
Below Conservative Estimates
Late on Tuesday, Puma forecast currency-adjusted sales for the current quarter to grow in a low single-digit percentage, below last year’s level, with "significantly" lower operating earnings for the same period. It said its annual currency-adjusted sales would grow in a low- to mid-single-digit percentage rate, compared with 4.4% growth to 8.82 billion euros ($9.62 billion) in 2024. It had previously expected 2025 growth to be stronger than in 2024.
Cost-Cutting Plan
The group forecast adjusted earnings before interest and taxes (EBIT) of 520 million to 600 million euros for 2025, before a one-time charge of up to 75 million related to its cost-cutting programme. "While expectations have lowered recently, we still think this guidance is below the most conservative estimates and raises more questions," Barclays analysts wrote in a note to investors.
Puma’s Larger Peer, Adidas, Records Solid Performance
Puma’s larger peer Adidas, meanwhile, recorded a solid performance in 2024 and adopted a cautious stance for 2025. "The stark contrast in regional performance and sell-through versus Adidas, in our view, underscores the importance of brand momentum in driving demand, but also orchestrating operational leverage amid a volatile retail environment," said Felix Dennl, an analyst at Metzler in Frankfurt.
Retro Shoe Models Boost Sales
Sales of popular retro shoe models helped boost sales of brands including Puma and Adidas last year. Puma said it still aims to sell 4 million to 6 million pairs of its relaunched motor racing-inspired "Speedcat" sneaker, though Freundt said an expected uptick in sales was taking longer than expected to materialise.
Conclusion
Puma’s disappointing quarterly and annual forecasts have raised concerns over the company’s ability to compete in a competitive market. The company’s cost-cutting plan, which includes job cuts and store closures, is aimed at addressing the challenges it faces. However, the company’s forecast for 2025 growth is below expectations, and its shares have slumped 23% in response to the news.
FAQs
- What was the reason for Puma’s disappointing quarterly and annual forecasts?
Puma’s target consumers in the United States were not spending due to economic uncertainty. - How many jobs will be cut as part of Puma’s cost-cutting plan?
Puma will cut 500 jobs worldwide and close some unprofitable stores. - How much of Puma’s shoe imports into the United States come from China?
About 10%, down from 30% in the past. - What is Puma’s forecast for 2025 growth?
Puma expects currency-adjusted sales to grow in a low- to mid-single-digit percentage rate, with "significantly" lower operating earnings for the same period.