“Pretty Shocking Print”: Puma’s Dismal Earnings Send Shares Crashing 

Puma shares crashed as much as 19% on Thursday, the largest intraday decline since September 2001. The selloff was triggered after the German sportswear company released preliminary 4Q24 net income figures that fell short of consensus analyst estimates. Also spooking investors, Puma announced a cost-efficiency program to curb margin pressures. 

Here’s a snapshot of Puma’s preliminary fourth-quarter results (courtesy of Bloomberg): 

• Prelim net income EU24 million, estimate EU54.5 million (Bloomberg Consensus)

• Prelim sales EU2.29 billion, estimate EU2.27 billion

• Prelim currency adjusted sales growth of 9.8%

• Prelim operating EBIT €109 million, vs € 94 million y/y

“Puma have pre-released their [fourth quarter/full year] results which are slightly below market expectations. Fourth quarter did not accelerate to the extent the market was anticipating with earnings and margin delivery also softer than expected,” analysts at RBC Capital Markets penned in a note to clients. 

“Overall, we expect the shares to be under pressure and anticipate consensus downgrades for 2025,” the analysts added.

Puma also announced cost cuts, with the aim of increasing the margin before interest and taxes to 8.5% by 2027. To achieve this, it said it would relocate staff to “strategic growth areas” such as marketing while keeping the total headcount “stable.”

Goldman’s Natasha de la Grense called the preliminary results a “pretty shocking print”:

Pretty shocking print in the context of 1) adidas pre-announcing positively, 2) Puma sounding confident on Q4 as recently as November. It’s a decent miss on Q4 EBIT (17%) driven by slightly worse cFX sales (+9.8% vs consensus +11.9%), GM but mostly opex. Simply reversing the €30m FX headwind last year should have got them to €124m EBIT and instead Q4 was €109m (consensus €131m) i.e. underlying profits down despite 9.8% sales growth. In addition, the 2025 8-8.5% margin target seems to have been pushed out as they are now talking to 8.5% by 2027 – consensus wasn’t quite there for next year (7.8%) and stock has pulled back recently on nervousness around 2025 margin guide but still think this optically looks poor. Bottom line, while “only” a 3% miss on FY24 EBIT, there is a growing credibility issue here and questions will be raised around that H125 order book (which had been guided up DD – similar to Q4 – and in the end Q4 wholesale was +6.9%).

The downgrade in profit margin guidance and cost-cutting efforts were enough to send shares in Frankfurt crashing by as much as 19%, the largest intraday decline since September 2001.

Here is additional commentary from Wall Street analysts (courtesy of Bloomberg): 

JPMorgan (neutral)

• Analyst Olivia Townsend calls the results “weak,” and says most of the sales shortfall against her estimates mainly came in the Americas region, where there was a surprising sequential deceleration in North America

• On the cost efficiency program, notes consumer discretionary companies tend to be rewarded in the long term for “earnings growth driven by the successful delivery of accelerating brand momentum (which we do not see much evidence of), rather than cost reduction”

• Results, along with those of Adidas, “demonstrate the importance of brand momentum” and make Adidas’s delivery seem even stronger

• PT cut to €42 from €47

Morgan Stanley (equal-weight)

• Analyst Grace Smalley says the change in commentary since November and launch of a cost efficiency program is likely driven by factors including a strengthening US dollar, increased tariff risk to China and slower momentum in Puma’s brand elevation strategy

• PT cut to €37 from €44

Citi (neutral)

• Analyst Monique Pollard says sales excluding FX were slightly softer than she had anticipated

• Net income also fell short of Pollard’s expectations; notes commentary from management on how this was caused by higher net interest expenses and higher non-controlling interests

Deutsche Bank (buy)

• Both the preliminary 4Q and FY results were “weaker than expected both from revenue and profitability perspective,” analyst Adam Cochrane writes

• PT cut to €55 from €60

Jefferies (hold)

• The new cost savings program as well as the shift of the margin target from 8%-8.5% in 2025 to 8.5% in 2027 suggests analyst estimate cuts for 2025 will be “significant despite a targeted step up in sales growth,” analyst James Grzinic writes

• If this happens, “the low valuation is unlikely to prove especially effective downside protection”

Bloomberg Intelligence

• “Higher costs to support Puma’s direct-to-consumer (DTC) segment are likely culprits to its weaker 2024 preliminary operating margin of 7.1%, which trailed consensus’ 7.3%,” analyst Poonam Goyal writes

Meanwhile, Puma’s struggles stand in stark contrast to those of its rival, Adidas AG, which reported solid earnings for the 4Q25, driven by high demand for its retro sneakers.