Puma Loses Market Value Amidst Weak Demand for Speedcat Sneakers and Declining Profit
Puma experienced a significant 20% decline in share value on Thursday after reporting below-expected Q4 sales and an annual profit drop. The German sportswear brand faces challenges in competing with industry giants Adidas and Nike.
Adidas' strong sales and profitability report overshadowed Puma's performance, highlighting the distance it must cover to establish a stronger brand and capture a larger portion of the $400 billion global sportswear market. Puma's stock dropped to €33.5, its lowest since March 2018.
Puma's rebranding efforts, including the relaunch of the motorsport-inspired "Speedcat" sneakers, failed to gain traction, according to JP Morgan analysts. Rapidly growing brands like On Running and Hoka have disrupted the industry, eroding Nike's dominance and increasing competition for retail shelf space.
"Investors will be asking what Puma's competitive advantage is," said Deutsche Bank Research analyst Adam Cochrane. "If Puma isn't really gaining market share at a time when its largest competitor (Nike) is weak, is the consumer not buying into the 'premiumization' of the brand that it's trying to do?"
Puma has invested heavily in marketing to enhance its brand perception. The Speedcats are priced at €109.95 on its website, on par with Adidas Samba sneakers. However, Puma's footwear has traditionally been cheaper than Adidas and Nike. The brand aims to sell 4-6 million pairs of Speedcats by 2025.
Puma's Q4 sales grew 9.8% currency-adjusted, below the 12% analysts anticipated. Annual net income declined from €305 million to €282 million due partly to increased interest payments. The company is expected to provide further guidance during its annual report on March 12.