Reduced Annual Goals Set by Puma Substantially
Puma Revises Revenue and Profit Outlook for 2021
Puma, the popular sports equipment manufacturer, has revised its revenue and profit outlook for the year due to several specific reasons. The company reported weaker-than-expected quarterly sales and a decline in overall sales by at least 10%, shifting from a previously forecasted low to single-digit growth to an expected low double-digit percentage decline.
In the second quarter, Puma's business in North America, Europe, and Greater China underperformed expectations. The decline in revenue was not limited to a single market but was observed across multiple key markets. When adjusted for currency impacts, the decline in second-quarter revenue was more pronounced at 8.3%. This was more than what Puma had anticipated.
The revised outlook is due to weaker revenue growth, increased currency impacts, the effects of US tariffs, and costs associated with cost-saving measures. The company now expects to post a loss instead of a previously forecasted profit of €445 million to €525 million in earnings before interest and taxes (EBIT).
Puma had previously targeted growth in the low to mid single-digit percentage range. However, the second-quarter revenue fell below €2 billion, specifically around €1.9 billion. Excluding currency effects, the decline in second-quarter revenue was more pronounced at 8.3%.
To address these challenges, Puma has revised its investment plans, intending to spend €50 million less than originally intended, totaling €250 million. The company is cutting new orders to align with the lowered expected demand and to reduce surplus inventory. Puma is also planning price increases in the fourth quarter of 2021 to soften the impact of tariffs and offset rising costs.
As part of efforts to turn performance around, Puma has appointed a new CEO, former Adidas sales chief Arthur Hoeld, starting July 1, 2021. The elevated inventory levels caused by rushing shipments from Asia to beat incoming tariffs have resulted in heavier discounts, lowering full price realization and profitability. At the end of Q2 2021, Puma's inventories had increased by 18.3% year-on-year, particularly in North America. This excess stock forced Puma to cut future orders to better match lower expected demand.
Overall, Puma’s revised outlook reflects a combination of external tariff pressures, inventory management challenges, softer demand, and weaker sales momentum. These factors have forced Puma to slow down its inventory buildup, raise prices strategically, and revise its profit expectations downward, which in turn affects its investment and operational plans for the remainder of the year.
Sports equipment manufacturer Puma, despite its focus on sports, has been impacted by issues in finance and business. The company's revenue decline in the second quarter, particularly in key markets like North America, Europe, and Greater China, has significantly affected their economic expectations for the year. Consequently, Puma's predicted profit from earnings before interest and taxes (EBIT) has shifted from a projected profit of €445 million to €525 million to a loss, due to factors such as increased currency impacts, US tariffs, and cost-saving measures.
