Falling sales, cutbacks and merger rumors: the perfect storm that Puma has caught
The sportswear brand is going through a financial crisis due to a drop in revenue and excess stock.
BarcelonaThe origin story of Puma has all the elements of a family saga. Two brothers—Adi and Rudi Dassler—in the small Bavarian town of Herzogenaurach, separated after World War II and founded two rival sportswear brands. Adi created Adidas using the initials of his first and last name, while Rudi chose to name his new company after a powerful feline: Puma, a clear metaphor for the agility he wanted to embody in his running shoes. However, the rapid growth of this company, born from family tensions, has slowed recently, and the German firm is now mired in a financial crisis that has forced it to make cuts. A few weeks ago, Puma announced it would lay off 900 employees from its corporate offices before the end of the year. The company, which employs around 7,000 people worldwide, had already cut 500 jobs this year to reduce costs. This decision is part of an internal restructuring that the group launched at the beginning of the year, which also included a change in CEO, a position held since July by Arthur Hoeld. Interestingly, Puma's new CEO comes from a career of more than 25 years at Adidas, which is experiencing the complete opposite, with double-digit sales growth and improved operating margins. In contrast, during the third quarter, Puma's revenue fell by 10.4%, excluding the effects of currency exchange rates, to €1.955 billion. In the first nine months of the year, this decline was 4.5%, with losses in all regions where it operates and across all product divisions.
"Where we see a snowball effect is in profitability," says José Guerrero, a brand consultant and coordinator of the Fashion Marketing and Communication Management program at the IED Barcelona design school. After three consecutive quarters of negative results and a sharp drop in its stock price—its value has plummeted by more than 60% so far this year—the expert believes we can speak of a crisis "more structural than sales-related." Fashion sector strategic consultant Pau Almar agrees with the diagnosis and points to another problem plaguing Puma: accumulated inventory. "The economic downturn caught them with a huge amount of stock, and since many distributors couldn't keep up with demand, they had to return it to their distribution centers," he explains. This situation—compounded by the obstacles caused by Donald Trump's tariffs—has forced the brand to apply more aggressive discounts, which are hurting its margins.
Pioneering Brand
As Guerrero points out, Puma was a pioneer during the 1990s and 2000s in exploring the fashion sector and forging alliances with third parties such as car manufacturers Ferrari and BMW. It was also one of the first sportswear brands to capitalize on the retro trend. "They've lost this last battle to Adidas, and now the quintessential retro model is the Samba," says this expert. Puma has achieved a certain viral success with its Speedcat model, Almar acknowledges, but a company can't live off a single hit product. "They aren't capable of creating a media frenzy that actually generates significant sales. Behind it, there are a large number of new brands arriving, and for many people, the brand has disappeared from their radar," he adds. Nike –which has also experienced some recent ups and downsPuma has captured consumers seeking performance in sneaker designs, while Adidas has retained those who prioritize style. Puma has been caught in the middle, despite its multimillion-dollar investment in advertising to associate itself with famous faces like Dua Lipa, Rihanna, and Neymar.
The sportswear company's crisis has also fueled a flurry of rumors about potential mergers. According to Guerrero, one of the candidates that could raise its hand in a sale scenario—total or partial—would be the Chinese company Anta Sports. Although its name isn't as well-known in Spain, it's the third-largest sportswear company in the world in terms of sales volume and the largest in China. Li-Ning, another booming firm from the Asian giant, is also among the potential buyers. "They are quietly entering Europe and could do so with an acquisition. This would be a financial lifeline for Puma," the IED professor points out. Fashion industry analysts even speculated about a merger with Adidas, its original rival.
As for the recipe for overcoming this crisis, Almar argues that the company will have to continue offering discounts "left and right" to reduce stock and carefully select collaborations to regain relevance. According to Guerrero, the feline brand must implement an internal restructuring, redesign its distribution strategy, and launch new products that can have an impact on the market. "It's currently in a perfect storm," he concludes.
