PUMA Stock Plunges On Weak Outlook, Dividend Cut, Despite Upbeat Q4

(RTTNews) - Shares of Puma SE were sinking around 23 percent in the morning trading in Germany after the sportswear maker on Wednesday warned on weak earnings in its first quarter and fiscal 2025 and trimmed dividend, despite reporting significantly higher profit in its fourth quarter with strong sales.

Arne Freundt, Chief Executive Officer of PUMA SE, said, "Our outlook for 2025 is below the expectations we set a year ago, both in terms of top and bottom lines. We are fully aware of the root causes of our challenges and are addressing them with full focus and rigor. …...While 2025 will be a challenging year, I am particularly excited to see the impact of our new brand campaign, the launch of our latest running innovations and the build-up of further traction with our exciting products offers in the low profile category."

Looking ahead, for the first quarter, EBIT on a reported basis is expected to be significantly below previous year's 159.0 million euros. Adjusted EBIT is projected to be around 70 million euros, and currency-adjusted sales growth are expected to be low-single-digit below last year's level, primarily due to a soft performance in the U.S. and China.

Further, for fiscal 2025, the company projects EBIT in a range between 445 million euros and 525 million euros, and adjusted EBIT in a range between 520 million euros and 600 million euros. In 2024, EBIT was 622 million euros.

Currency-adjusted sales growth for the year is projected at low- to mid-single digit percentage rate. In fiscal 2024, currency-adjusted sales growth was 4.4 percent.

In the new year, Puma anticipates that geopolitical tensions and macroeconomic challenges will continue, especially trade disputes and currency volatility, which is expected to weigh on consumer sentiment and demand in key markets.

While the environment remains volatile and challenging, the company said it will continue to focus on its controllables, executing its brand elevation strategy and taking decisive actions to address its cost basis with its nextlevel programme.

It was in February 2025 that PUMA initiated the efficiency programme "nextlevel", aiming to achieve an EBIT margin of 8.5 percent by 2027.

The nextlevel cost efficiency programme is expected to incur one-time costs of up to 75 million euros in 2025. In return, the company expects to generate additional EBIT of up to 100 million euros in 2025.

Further, the Management Board and the Supervisory Board would propose to the Annual General Meeting on May 21 the distribution of a dividend of 0.61 euro per share for the financial year 2024, down from prior year's 0.82 euro.

Under the current programme, PUMA plans to buy back own shares for up to 100 million euros between March 6 and May 6.

In its fourth quarter, net income came in at 24.5 million euros, higher than prior year's 0.8 million euros. Earnings per share amounted to 0.16 euro, up from 0.01 euro last year.

The operating result or EBIT increased 15.3 percent to 108.9 million euros from prior year's 94.4 million euros, due to sales growth and gross profit margin improvement. The EBIT margin came in at 4.8 percent, same as last year.

Operating expenses grew 15.8 percent year-over-year to 982 million euros.

Sales grew 15.5 percent from last year to 2.29 billion euros. Currency-adjusted sales increased 9.8 percent. Sales growth came from all regions, product divisions, and distribution channels.

Sales in the EMEA region increased 14.6 percent to 796.5 million euros, driven by double-digit growth in Europe and EEMEA. In the Americas region, sales increased 6.5 percent to 986.3 million euros.

The Asia/Pacific region recorded sales growth of 9.5 percent, despite an ongoing softness in Greater China.

PUMA's Wholesale business grew 6.9 percent to 1.53 billion euros. Direct-to-Consumer or DTC business climbed 16.1 percent, and aales in owned & operated retail stores increased 12.8 percent, while e-commerce grew 22.0 percent.

Sales in Footwear went up 9.2 percent from last year to 1.21 billion euros, driven by growth in Performance, primarily in the Running category, and in Sportstyle driven by Core and Kids business. Sales in Accessories grew 14.5 percent and Apparel increased by 8.8 percent.

In 2024, PUMA achieved sales growth across all regions and product divisions and improved its gross profit margin, while the operating result (EBIT) remained stable.

In Germany, on the XETRA, Puma shares were trading at 21.90 euros, down 22.9 percent.

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