Forecast by Puma's leader indicates extended periods of water scarcity
In a surprising turn of events, sports apparel giant Puma has announced a significant downward revision to its 2025 outlook, with the company now forecasting a full-year EBIT loss [1][2][3]. This stark contrast to its previous expectation of an EBIT profit between €445 million and €525 million is due to weaker-than-expected sales and a profit warning.
The key factors driving this revision include softer sales trends in key markets, increased currency exchange pressures, the impact of US tariffs, elevated inventory levels, increased promotional activities, and one-time costs [1][2][3]. North America sales dropped 9.1%, Europe and Greater China both fell 3.9% in Q2 2025 [1][2].
The potential impact of new US tariffs is a concern for Puma, particularly relevant for sporting goods industries in Asian countries like Vietnam, China, and Cambodia, where Puma could be burdened with around €80 million [1][2][3]. This, coupled with the increased promotional activities, has led to a reduced gross profit margin, which fell to around 46.1%-46.5% [1][3].
In response to this challenging environment, Puma is taking several measures to steer its turnaround and growth efforts [1]. These include actively reducing inventory levels, implementing cost-alignment measures, optimising supply chains, adjusting pricing strategies, and seeking closer partner collaboration to mitigate ongoing macroeconomic and tariff-related challenges.
Leadership change is also on the cards, with Puma appointing Arthur Hoeld, former Adidas sales head, as its new CEO and board chairman [1]. Hoeld is tasked with developing a new strategy by the end of October.
The revised outlook indicates a challenging year ahead with contraction in sales and earnings, alongside strategic efforts focused on cost control, inventory management, and operational improvements to stabilise and eventually restore growth. The stock had fallen even further in early trading following the profit warning, with sales now expected to shrink by at least 10%, not grow by 1-5% as previously expected [1].
Analysts such as Chiara Battistini of JPMorgan and Robert Krankowski of UBS have advised caution, with Battistini describing the numbers and new targets as a significant negative surprise [2]. Krankowski had advised the sale of the stock since March [2].
Despite these challenges, Puma's CEO, Bjørn Gulden, remains optimistic. He aims to develop a new strategy by the end of October, with a focus on improving distribution and "storytelling" [2]. No improvement is expected in the second half of the year, which could lead to an increase in inventory [2].
With these changes, Puma is poised to face a significant year of transformation, aiming to stabilise and eventually restore growth in the face of challenging market conditions.
Sources: [1] Reuters (2025). Puma lowers 2025 outlook, new CEO to steer turnaround. Retrieved from https://www.reuters.com/business/retail-consumer/puma-lowers-2025-outlook-new-ceo-to-steer-turnaround-2025-08-01/ [2] Financial Times (2025). Puma's profit warning sends shares tumbling. Retrieved from https://www.ft.com/content/38411d44-343d-4c01-9648-d80a170f577b [3] Bloomberg (2025). Puma Cuts Full-Year Sales, EBIT Outlook on Weak Demand, Tariffs. Retrieved from https://www.bloomberg.com/news/articles/2025-08-01/puma-cuts-full-year-sales-ebit-outlook-on-weak-demand-tariffs
The industry-wide challenges confronting Puma, such as weaker sales, increased costs, and currency exchange pressures, have resulted in a revised financial forecast for the year, predicting a loss instead of a profit as previously expected. The company's newly appointed CEO, Arthur Hoeld, is tasked with addressing these issues by implementing cost-alignment measures, optimising supply chains, and adjusting pricing strategies in an effort to stabilise and grow the business.
