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Puma Implements Cost-Cutting Measures Amid Profit Decline
LONDON (Reuters) – Puma, the renowned sportswear brand, has initiated a cost-reduction program following a decline in its net profit for 2024, which fell short of expectations.
In preliminary results shared after market hours, Puma reported a net profit of 282 million euros ($294 million), a decrease from 305 million euros in 2023. The company indicated that increased interest payments on its debt negatively impacted its earnings.
“Despite achieving robust sales growth in 2024 and making significant strides in our strategic initiatives, we are not satisfied with our profitability,” stated Arne Freundt, CEO of Puma, although he did not specify the company’s profit expectations. Freundt anticipates an uptick in growth for 2025 compared to the previous year.
The drop in net profit was also influenced by a rise in non-controlling interests. Puma explained that while its joint venture with United Legwear & Apparel Co (ULAC) performed well, it could recognize only 51% of the profits, with the remaining share allocated to ULAC.
The newly established cost-cutting initiative aims to restore Puma’s earnings before interest and tax (EBIT) margin to 8.5% by 2027, with a longer-term goal of achieving a 10% EBIT margin. The EBIT margin for 2024 was reported at 7.1%.
Puma’s spokesperson mentioned that while the program will seek savings, particularly in personnel expenses, the company does not plan to implement significant layoffs, aiming instead to maintain a stable workforce. “We will ensure that we allocate resources where we need them to drive our growth,” the spokesperson noted in an email.
In the fourth quarter, a critical retail period, Puma experienced a 9.8% increase in sales on a currency-adjusted basis, totaling 2.289 billion euros ($2.38 billion). Overall, sales for 2024 rose by 4.4% in currency-adjusted terms, reaching 8.817 billion euros.
Regionally, Puma’s fourth-quarter sales saw a remarkable 14.3% growth in the Europe, Middle East, and Africa (EMEA) region, alongside a 7.4% increase in Greater China. Footwear, which remains Puma’s most significant product category, recorded a 9.2% increase in sales during the quarter, while apparel sales grew by 8.8%.
Puma is scheduled to announce its comprehensive fourth-quarter and annual sales report on March 12.
($1 = 0.9602 euros)
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