The sporting goods manufacturer Puma is further postponing its medium-term operating margin target. CEO Arne Freundt justified this on Thursday at the Capital Markets Day with significant headwinds on the currency side. This will have a negative impact on earnings before interest and taxes (EBIT). The corresponding margin should now reach 8.0 to 8.5 percent in 2025, he said in Herzogenaurach. Last year the EBIT margin fell from 7.6 percent to 7.2 percent.
Freundt sees the target of around ten percent, which Puma originally set at its last capital market day in 2018, as a long-term project in the future. Puma actually wanted to reach the mark in 2022, but then pushed it back due to the Corona crisis, most recently to 2025. Some analysts had already expected a further postponement. When it comes to sales, Puma is targeting average currency-adjusted growth in the high single-digit percentage range for the years 2023 to 2025, as Freundt further explained.
Need for improvement in USA and China
The manager sees a clear need for improvement in the important sports markets of the USA and China, where the company is lagging behind the competition. Domestic manufacturers dominate in the United States; as the third largest European brand, Puma only ranked eighth last year with less than three percent market share. In the USA, Puma products have often been sold at low prices, complained Freundt. The share should be pushed back. The company wants to return to growth this year, and this should then accelerate in 2025.
The picture in China is even bleaker. Here, Puma took 16th place with a market share of over one percent, far behind international and Chinese sporting goods manufacturers. The Corona crisis had put a considerable strain on Puma here. In addition, Puma is currently not perceived enough as a sports brand and more as a lifestyle brand, Freundt complained at the annual press conference a few days ago.
Puma wants to emotionalize
Puma announced its first global brand campaign in ten years to boost growth when it presented its annual results on Tuesday. In addition, market shares are to be gained. Freundt said there that the “emotional bond” between consumers and the brand needs to be strengthened. However, the proportion of marketing expenses of around ten percent of total costs should not be increased – instead, Puma wants to concentrate more on essential parts of its product range. For example, there will be product innovations for football and running shoes. Overall, the trend in the industry is towards so-called low-profile shoes – footwear with particularly flat soles.
This morning, Puma announced a change to its dividend policy. In the future, the payout ratio should be 25 to 40 percent of the consolidated result. Previously the upper limit was 35 percent. Puma also announced a share buyback program that is expected to have a volume of 10 to 25 percent of group earnings. Overall, a payout ratio of up to 50 percent of the consolidated result should be achieved. The company justified the move with an expected robust cash inflow. The first tranche provides for the buyback of own shares with a total purchase price of up to 100 million euros by May 2025.
Puma shares were very volatile during trading. After the publication of the higher payout ratio, it jumped briefly, only to quickly give up the profits and turn into the red. In the afternoon, the loss initially widened before it picked up again and the stock rose slightly to positive territory.
With sales of 8.6 billion euros last year – an increase of 6.6 percent on a currency-adjusted basis compared to 2022 – Puma is number three in the industry worldwide behind the US industry leader Nike and the Franconian local rival Adidas. (dpa)