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Shares in Puma plunged on Thursday after the German sportswear brand reported it missed its 2024 profit target.
Preliminary results published on Wednesday evening showed net profit for 2024 of 282 million euros, down from 305 million euros a year earlier and also below analysts’ expectations. Excluding currency effects, sales increased by 4.4% to 8.8 billion euros. Puma shares fell 17% in morning trading following the results.
“We achieved solid sales growth in 2024… We are not satisfied with profitability,” said CEO Arne Freund.
The results came shortly after rival Adidas reported better-than-expected profits for the final quarter of 2024, thanks to strong demand for classic trainers such as the Samba and Gazelle and strong Christmas trading.
Puma attributed the decline in profits to higher interest expense, noting that sales through the U.S. joint venture increased, but profits from it were shared with other joint venture partners.
The company said Thursday that it aims to improve profit margins through cost reductions, including redeploying staff to “strategic growth areas” such as marketing, while keeping total headcount “stable.”
Freund, who took over as CEO in 2022, said Puma expects higher growth in 2025 than in 2024, adding that “the focus will be” on translating increased revenue into improved profitability.
Sales in the final quarter of 2024 increased 9.8% year-on-year, with accessories and direct-to-consumer sales outpacing sports shoes and clothing.
Adidas is run by Björn Gulden, former CEO of Puma. While Adidas’ share price has risen more than 50% over the past year, Puma’s share price was flat until today’s decline, reducing its market capitalization by around 1 billion euros.
Although there are differences in performance, both companies are pursuing cost reductions.
German business publication Manager Magazine reported on Wednesday that Adidas plans to cut up to 500 jobs out of 5,800 headcounts at its headquarters.
Adidas said the restructuring plan would first be discussed at the company’s works council and it was too early to comment on the exact number of job cuts.
“Our current operating model makes us too complex in an ever-changing world,” the company said, adding that the changes “could impact the organizational structure and number of roles based at our headquarters in Herzogenaurach.” It’s sexual,” he added.
Analysts and employees had expected restructuring after Mr. Gruden expressed a desire to give regional managers more autonomy and work more closely with retailers.
