German sporting-goods brand Puma has launched ‘NextLevel’ cost efficiency programme, after its 2024 net income fell short of the previous year’s figure and expectations.
The decline in net income of €282m ($293.83m) against €305m in 2023 was primarily attributed to increased net interest expenses and higher non-controlling interests.
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The company’s preliminary and unaudited results for the fourth quarter and 2024 showed a robust uptick in sales to the tune of €2.28bn in Q4.
This represents an increase of 15.5% on a reported basis and a 9.8% surge when adjusted for currency fluctuations compare with the same period last fiscal.
The company’s growth in Q4 was driven by all regions, with a notable enhancement in wholesale business performance, which saw a 6.9% rise, alongside a persistent expansion in direct-to-consumer operations that climbed by 16.1%.
Q4 regional and segment performance
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By GlobalDataThe final quarter exhibited an escalated growth trajectory as compared to the initial nine months of 2024, with sales growing 14.3% in Europe, the Middle East and Africa and 10.3% in Europe.
In the Greater China region, sales grew by 7.4%, and in other Asian Pacific regions, it rose by an impressive 19.0%.
Sales in North America also increased by 2.6% over the quarter, while in LATAM, sales growth were more modest at 7.0%.
Over the quarter, Puma’s Footwear division experienced a growth of 9.2%, Apparel ascended by 8.8%. Accessories segment outpaced both with a significant 14.5% increase.
FY24 performance
Puma’s annual sales echoed the positive trend, aligning with projections at €8.81bn, an elevation of 2.5% on reported terms and a currency-adjusted leap of 4.4%.
Throughout the year, the brand witnessed an uplift across all regions, product divisions, and distribution channels in currency-adjusted sales relative to the preceding year.
This ascent was accompanied by an expansion in gross profit margin by 110 basis points, settling at 47.4%.
The company’s earnings before interest and taxes (EBIT) for the full year stood steadfast at €622m, mirroring last year’s figures and adhering to the forecasted EBIT outlook for the entire year of 2024.
‘Nextlevel’ cost efficiency programme
In response to these financial outcomes, Puma’s “nextlevel,” is designed to propel its EBIT margin to an aspirational 8.5% by the year 2027. The company will focus on optimising direct and indirect costs including personnel expenses through enhanced resource allocation that resonates with strategic growth areas.
This initiative targeting cost efficiency aligns with Puma’s ongoing strategy to elevate its brand.
Amidst an ever-shifting market landscape, Puma is poised to continue strategic investments in its brand identity to foster growth while simultaneously implementing the “nextlevel” programme to augment its operating result starting from 2025.
Alongside the brand elevation strategy, the company aims to reach a 10% EBIT margin in the long term.
Puma CEO Arne Freundt said: “While we achieved solid sales growth in 2024 and made meaningful progress on our strategic initiatives, we are not satisfied with our profitability.
“With a heightened focus on translating top-line growth to increased profitability growth, we have initiated “nextlevel”, a comprehensive efficiency program targeting cost optimisation and operational improvements. Combined with decisive actions already taken, we will implement further cost control measures in 2025. While we continue to operate in a dynamic environment, we are encouraged by our improved growth throughout 2024 and expect 2025 to grow stronger than 2024.”
In November last year, Puma unveiled its new Vision 2030, establishing more ambitious sustainability targets across climate, human rights, and circularity to be achieved by 2030, with a focus on creating positive impact for both people and the planet.
