Updated Feb. 27 at 7:06 p.m. GMT
Although Puma reported positive results in 2023, the brand concedes it still has work to do, particularly in North America.
Last year Puma saw sales grow 6.6 percent in currency adjusted terms to 8.6 billion euros.
But the positive result came on the back of a difficult fourth quarter, during which Puma saw sales decrease in almost every category. Over the last three months of 2023, sales fell 4 percent, currency adjusted, to 1.98 billion euros.
“2023 was a success despite all the macroeconomic and environmental challenges and the geopolitical volatility we experienced,” said the brand’s chief executive officer Arne Freundt, who was optimistic at a press conference in Germany discussing the results. “It was another year where we showed the market that Puma is the challenger, both in sports and sports culture.”
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Puma is currently the third-largest sportswear company in the world after Nike and Adidas.
But, Freundt conceded later as he presented the company’s goals for the coming year, “the U.S. remains a tough market for us and it will remain tough going into 2024.” The plan for this year is to elevate the brand’s profile and “win” in North America and China, he added.
Puma saw fourth quarter declines in both of its biggest markets. In Europe, the Middle East and Africa, sales fell 5.2 percent in the fourth quarter. Still, for the whole year in this territory sales remained positive, growing 13.4 percent to hit 3.42 billion euros.
In the Americas, fourth-quarter sales also dropped, by 6.4 percent in currency adjusted terms. That equaled a fall of 2.4 percent there, in currency adjusted terms, to bring in 3.39 billion euros over all of last year.
Puma blamed the devaluation of the Argentinian peso for part of the decrease in the Americas, explaining that this had an impact of around 400 million euros on its numbers. As a result sales in Latin America only grew 4.7 percent, currency adjusted, in the fourth quarter. Still, there was growth of 28.8 percent for the full year in this territory. After the numbers were announced, market analysts pointed out the Argentinian currency was not the only issue the company was dealing with.
Breaking down the Americas further, numbers from North America looked far more problematic. There Puma sales have been dropping every quarter, after very positive, albeit slowing, growth throughout 2022. In the final quarter of 2023, Puma sales in North America decreased 10.9 percent in currency adjusted terms. That meant for the whole year North American numbers ended 14.7 percent down, indicating a fall from around 2.5 billion euros last year to about 2.1 billion euros this year.
Freundt explained the company’s America problem as partially due to too much discounting. “The majority of our decline there was through the off-price business,” he said. “That exposure was more transactional, rather than helping us to build a brand in the U.S.” Puma has since been successful at reducing that off-price segment to a more stable level, the CEO said, and will continue to work on that.
Freundt also believes that consumers don’t know Puma well enough in the U.S. and further afield too.
“It is about the clarity [about] what does Puma stand for in the consumers’ mindset? How clearly are they associating certain attributes with the brand?” he told journalists. “And let’s just say this is where, in certain countries, we are still not regarded as a performance brand — especially in the U.S. and China. We need to be more clear that Puma is a sports brand and that is always the foundation. That always needs to be communicated.”
The company’s strategy remains the same as that of previous CEO Bjorn Gulden, who moved to run Adidas at the beginning of 2023: Gain credibility in performance sports gear and shoes, then build on that credibility and advance sports style and streetwear from there.
This is also why Puma will be launching a more general brand awareness campaign this year, Freundt said. It’s the first time the company has done this in a decade. Previously Puma had plenty of marketing campaigns around individual products but now the brand itself needs to be boosted. Puma needs more of an “emotional connection” with its customers, he argued.
Freundt wouldn’t go into detail about the campaign but hinted that it would revolve around the theme of self-realization and pride, rather than following others.
Puma’s marketing and sales management has been reorganized but the company doesn’t plan to spend more than it usually does on marketing, Freundt explained. It’s just that the spend has been allocated differently.
China is another area where sales had grown for the past few years but slumped in 2023, even if not to the same extent as in North America. Asia Pacific was Puma’s best-performing sales territory, during the full year and sales there grew 13.6 percent, currency adjusted, to 1.79 billion euros.
As part of that, sales in Greater China grew 19.2 percent, although this is partially due to positive year-on-year comparisons and the later Chinese recovery from COVID-19 lockdowns; most of 2022, Greater China had been seeing double-digit decreases of more than 35 percent.
The rest of the Asia Pacific region saw positive growth too, with sales rising 11.1 percent for the whole of 2023.
In terms of Puma’s product categories, both footwear and apparel sales fell over the last quarter, by 5.5 percent and 5.9 percent respectively. Only accessories, the brand’s smallest sector, increased sales in the final three months of the year, by 7.3 percent.
This resulted in flattish apparel sales for the full year: They fell by 0.3 percent, currency adjusted, to bring in 2.76 billion euros last year. Footwear, Puma’s biggest category, rose 12.4 percent, currency adjusted, to 4.58 billion euros. Accessory sales increased 3.1 percent, currency adjusted, over the year to total 1.25 billion euros.
The company’s chief product officer Maria Valdes told journalists that Puma wants to start creating trends rather than just following them. Puma hopes to benefit further from the trend for stadium shoes and skateboarding looks with Puma models like the Suede XL and Palermo, she said. Valdes also believes the increasing desire for “low-profile” shoes — that is, sneakers flatter than fashionable, chunky, platform styles — should make Puma models like Mostro and Speedcat more popular.
Puma’s EBIT — earnings before income and profit, a key metric — totaled 621.6 million euros last year, a decrease of 3 percent. This was due to higher operating costs and negative currency effects, the company said, even though fourth-quarter EBIT had developed more positively. The sportswear sector has struggled with higher production and freight costs as well as mild inflation and weaker consumer demand.
For the coming year, Puma expects more of the same. In its statement, the brand predicted growth in the midsingle-digits for 2024 and EBIT between 620 million euros and 700 million euros. Puma also forecast a difficult first half of this year with “geopolitical and macroeconomic headwinds as well as currency volatility” causing further “muted consumer sentiment and volatile demand.”
Puma’s results were broadly in line with market expectations, analysts from the likes of Deutsche Bank, Baader Bank, UBS, Jeffries and others concluded. The brand had already announced preliminary results in January this year.
Analysts also agreed with Freundt’s warnings about a softer first half of 2024, noting that Puma is now also facing increased competition from other smaller sportswear brands like On Running and Hoka.