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Threat of Higher U.S. Tariffs Could Dent Puma’s Prospects
Cathrin Schaer
5 min read
Announcing third-quarter results on Tuesday morning, Puma listed several reasons for its somewhat sluggish performance so far this year.
The German sportswear brand’s revenues fell 0.1 percent to 2.31 billion euros. When adjusted for currency effects, sales were 5 percent up. Analysts had previously forecast revenues of 2.36 billion euros for the three-month period and this is the second quarter in a row that Puma has announced results below consensus expectations.
As executives explained, Puma’s challenges have included currency headwinds, rising freight costs and weak consumer demand in China.
On Tuesday morning, during an online press conference, Puma chief executive officer Arne Freundt conceded that the company might soon have another issue to deal with.
Between July and September, the German sportswear brand grew the most in the Americas, with 11.4 percent growth. North American sales grew 6.1 percent, currency adjusted, and Latin America 20.4 percent.
However Donald Trump’s imminent return to the White House appeared to worry shareholders in both Puma and its much larger competitor, Adidas. During campaigning, Trump has promised more tariffs on imported goods and investors are worried that could cause the German companies problems in the future.
Puma shares fell 4.5 percent in value during morning trading and Adidas shares eased 2.6 percent.
Adidas is likely better placed to deal with new or higher tariffs, German media reported, because it has previously reduced the amount of Chinese-sourced product it imports into the U.S. But around a third of Puma products going into the U.S. are still made in China.
Freundt argued Puma was prepared for such eventualities. “It’s clear we are following and focusing on a multi-country-of-origin strategy,” the executive told journalists. “We have consolidated our supplier base and we have suppliers who can cater out of multiple countries. In a volatile environment we are very well positioned to react swiftly, if certain tariffs are increasing.”
For the whole second half of this year, Puma expects to see growth in the Americas continue and predicts this will land in the low- to midsingle digits.
In Europe, the Middle East and Africa, Puma sales gained only 0.8 percent. The company blamed this on tough comparable figures from the previous year. In Europe itself, Puma actually saw currency-neutral growth of 2.2 percent. But in eastern Europe, the Middle East and Africa, revenues fell 3.8 percent.
In the third quarter of last year, the latter zone had seen growth of 64 percent, Freundt pointed out. “We saw reopening effects in Ukraine and very strong growth driven by the Middle East and the opening of a lot of franchise stores in Saudi Arabia,” he explained, adding that Puma expected a return to growth in this territory in the next quarter.
In Asia-Pacific, Puma recorded an increase of 3 percent. This was despite “softer consumer demand in Greater China,” the company noted.
Footwear sales — Puma’s biggest segment — rose 9.3 percent in the quarter, driven by its performance category, the company said. Accessories sales gained 2.9 percent while apparel sales slipped 0.7 percent.
Those numbers were driven by Puma’s performance categories and sports style, Freundt confirmed, before elaborating on how the company planned to accelerate growth in the near future.
With its Palermo shoe, Puma is currently benefiting from the same terrace trend that’s led to big numbers at Adidas. But Freundt predicted that next year, Puma’s Speedcat shoe would be even bigger. The Speedcat, originally developed for motor racing in the 1980s, is part of the increasingly popular “low-profile” trend in footwear.
“For me, after being 13 years with the company, this is the first time we have entered the Lyst Index,” Freundt said, referring to Lyst’s quarterly rankings of fashion’s hottest brands. “[Speedcat] made it to a very strong number three position. That’s something that we have never achieved before. I think it’s clear we’re onto something very hot.”
Puma plans more colors for the Speedcat next year and, according to initial forecasts, should be able to sell between 4 million and 6 million pairs during 2025.
Puma also plans to boost what Freundt calls its “progressive running shoes.” That includes the Mostro and Inhale sneakers, favored by musician A$AP Rocky, as well as the soon-to-be-released Inverse, the first shoe designed in the U.S., specifically for U.S. consumers.
All this should lead to a “stronger foundation” and “strong but sustainable growth,” Freundt argued.
“For the fourth quarter, we anticipate low double-digit sales growth in constant currency due to our strong order book,” Puma’s financial officer Markus Neubrand added.
Analysts from the likes of Deutsche Bank, Barclays, Jeffries and the Royal Bank of Canada agreed that Puma had mostly performed as expected and noted that the company’s third-quarter EBIT, which rose 0.3 percent to 237 million euros, was slightly above the market consensus. Robert Krankowski, a market analyst with Switzerland’s UBS, also expressed concerns that Puma’s best results this quarter were dependent on sales development in America.
Puma confirmed its guidance for the full year. It still expects growth to come in the midsingle digits. Puma had lowered estimates for EBIT in the second quarter slightly and reconfirmed that it expects EBIT somewhere between 620 million and 670 million euros for all of 2024.
