Puma SE (PMMAF) Q2 2025 Earnings Call Highlights: Navigating Challenges with Strategic Adjustments
H1 2025 Revenue: Decreased by 1% in constant currency to EUR 4.02 billion.
Gross Profit Margin: Decreased by 70 basis points to 46.1%.
Adjusted EBIT: Ended at minus EUR 13.2 million.
Direct to Consumer Business: Grew by 9.2% in constant currency to EUR 601 million.
E-commerce Growth: Increased by 19.4%.
Footwear Sales: Increased by 5.1% to EUR 1.61 billion.
Inventory Levels: Increased by 10% in Euro and 18% in constant currency to EUR 2.15 billion.
Full Year 2025 Guidance: Currency adjusted sales forecasted to decline low double digit; EBIT expected to be a loss.
Capital Expenditure Plans: Expected to invest around EUR 250 million in 2025.
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Release Date: July 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Puma SE (PMMAF) reported a 9.2% growth in its direct-to-consumer business, driven by a 19.4% increase in e-commerce sales.
Footwear sales increased by 5.1%, driven by the running and sports categories.
The company is taking decisive actions to align its cost base and ensure competitiveness, including strategic pricing adjustments and optimizing the supply chain.
Puma SE (PMMAF) is committed to transparency and proactive communication, as evidenced by the early update of its guidance.
The new CEO, Arthur Hoeld, is focused on a thorough assessment and strategic reset to unlock the brand's potential and establish a foundation for long-term sustainable growth.
Negative Points
Sales in the second quarter decreased by 2% in constant currency, with significant declines in key markets such as North America, Europe, and Greater China.
The gross profit margin decreased by 70 basis points to 46.1%, impacted by promotions and currency headwinds.
Adjusted EBIT ended up at minus EUR13.2 million, driven by a lower gross profit margin and non-recurring charges.
Elevated inventory levels are leading to lower full-price realization, and the company expects this issue to take up to 12 months to resolve.
Puma SE (PMMAF) revised its full-year guidance, anticipating a low double-digit decline in currency-adjusted sales and a loss in EBIT for 2025.
Q & A Highlights
Q: Could you share your initial thoughts on Puma's brand innovation strategy and how you plan to differentiate Puma in the competitive landscape? Also, how do you see the channel mix evolving? A: Arthur Hoeld, CEO: The previous strategy of brand elevation will not continue. I am still assessing the situation and will provide a clear strategy by the end of October. Regarding distribution, we aim to strengthen our own channels, such as e-commerce and retail, while maintaining a healthy mix with wholesale partners across all continents.
Q: The guidance for the second half implies a sharp deceleration. Could you explain where this deceleration is coming from? A: Markus Neubrand, CFO: The deceleration is expected due to continued softness in North America, Europe, and Greater China, particularly in the wholesale channel. We have seen increased order cancellations and lower reorder business. Additionally, challenges like elevated inventory levels and brand momentum issues have been factored into our outlook.
Q: How do you plan to balance price increases to offset US tariffs with elevated inventory levels and wholesale declines? A: Arthur Hoeld, CEO: The strategic pricing adjustments will be for the US only. We expect to mitigate the impact of US tariffs by EUR80 million this year. We are also focusing on improving our distribution quality and aligning inventories with expected demand to build a sustainable, profitable business.
Q: Can you provide more details on the one-off costs and their impact on the financials? A: Markus Neubrand, CFO: In Q2, we had EUR85 million in one-off costs, with two-thirds related to the next level program, primarily due to corporate position reductions. The remaining costs include a goodwill impairment in Japan and deferred tax asset write-offs. Additional measures in the second half may also incur one-off charges.
Q: How do you plan to avoid brand damage while clearing inventory and increasing full-price sell-through? A: Arthur Hoeld, CEO: We are focusing on improving our distribution quality and mix, addressing elevated inventories, and aligning inventories with expected demand. Our goal is to build the brand and a sustainable, profitable business, which is reflected in our guidance for the full year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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