Puma Faces Bleak Outlook: Tariffs and Weak Sales to Drive 2025 Loss

German sportswear giant Puma has issued a revised financial outlook for 2025, now predicting a full-year loss. This significant adjustment is driven by declining sales and a projected hit to gross profit from U.S. tariffs. Puma has been contending with persistent difficulties in enhancing sales and profitability, leading to the appointment of Arthur Hoeld, formerly a sales executive at Adidas, as its new chief executive in April.

Puma did not disclose the precise magnitude of the anticipated annual loss. However, the company had previously forecasted earnings before interest and tax (EBIT) for the year to be between 445 million euros and 525 million euros. The company now expects its currency-adjusted sales for 2025 to decrease by at least 10%, a stark contrast to its earlier projection of low- to mid-single-digit growth.

In March, Puma had signaled impending job reductions and cautioned about uncertain consumer demand in the United States. The company now states that "both industry-wide and internal challenges" will continue to significantly affect its performance.

Puma's second-quarter currency-adjusted sales of 1.94 billion euros ($2.28 billion) fell below analyst expectations. Sales in North America declined by more than 9%, while Europe experienced a drop of nearly 4%. Despite implementing mitigation strategies, such as optimizing its supply chain and adjusting pricing, Puma anticipates that U.S. tariffs on imports will likely reduce its 2025 gross profit by approximately 80 million euros.

Shares of Puma experienced a sharp decline of more than 18% in early trading following these announcements. The stock has now fallen by around 44% since the beginning of the year. Analysts from J.P. Morgan noted that Puma's quarterly results and updated outlook were considerably lower than expected, predicting a negative market reaction. Puma, like other major sportswear retailers such as Nike and Adidas, imports goods into the U.S. from various countries including China, Vietnam, Cambodia, and Bangladesh, making it vulnerable to these tariffs.

Puma's challenges are also linked to "muted brand momentum" and the underwhelming performance of retro sneaker re-releases, such as the Speedcat, which have not met sales expectations. The company acknowledged that these factors, combined with U.S. tariffs, would continue to impact its results. It also indicated shifts in channel mix and elevated inventory levels as contributing factors to its reduced profitability.

Puma's CFO, Markus Neubrand, previously stated in May that while the company anticipated industry-wide price increases due to trade tariffs, it did not wish to lead such changes in the U.S. market, recognizing that other dominant players in the industry have a greater reliance on the U.S. market. The company also reported a net loss of 246.6 million euros in the second quarter. In response to the challenging environment, Puma has initiated measures including supply chain optimization, price adjustments, and closer collaboration with retail partners.