Despite solid sales growth across all regions, Puma has announced a cost-cutting programme as its profits fell short in 2024. Some are even raising concerns about the brand’s future.
‘Nextlevel’ cost-saving initiative
Puma increased its sales by 4.4 % to 8.8 billion euros last year, driven by growth in all regions and product categories. Direct-to-consumer sales rose 16.1%, while accessories saw a 14.5 % growth. The gross profit margin improved by 110 basis points to 47.4 %. On the other hand, the EBIT margin remained at 7.1 %, the same as in 2023, while net profit declined to 282 million euros. CEO Arne Freundt explicitly stated he is not satisfied with profitability.
To address this, Puma is launching a cost-saving programme named ‘Nextlevel’, aimed at optimising direct and indirect costs. While the programme will include personnel expenses, it is unclear whether this will lead to layoffs. The German sports brand stated that its goal is to achieve an EBIT margin of 8.5 % by 2027.
Analysts are concerned that Puma is not capitalising on the challenges faced by market leader Nike. Despite efforts to compete with re-releases of popular shoes like the Speedcat, Puma’s market share remains under pressure. Rival Adidas recently did report strong results, while newcomers such as On Running and Hoka are intensifying competition in the sports fashion segment.
