Puma SE shares opened 16 percent lower in Europe on Thursday morning after a pre-announcement of 2024 fourth quarter and full-year results on Wednesday, January 22 caused a stir overnight.
Reuters reported that Puma’s stock fell as much as 19 percent early in the morning in Frankfurt, Germany trading, calling it “the biggest drop in more than two decades.” Shares were down over 20 percent as the sun came up in the U.S. but fell a total of 22.8 percent for the day to close at €32.31 per share on Thursday after analysts and investors had time to digest the news from the early report and early analysts’ notes.
See SGB Media’s complete coverage of the early Puma report at the bottom of this article.
It is hard not to make comparisons between two brands founded by the Dassler brothers in the last century, as Adidas and Puma appear to be on divergent paths. Adidas has been on a bit of a tear despite issues with the Yeezy brand and as the company fully embraced the SportStyle side of its business that built brand heat over the last year as Nike faltered.
That is not to say that Puma is not growing.
Fourth-quarter growth was solid, with currency-adjusted sales up nearly 10 percent in the period, but, unfortunately, the company did not pair its sales acceleration with a report on earnings for the fourth quarter, so the market was left to absorb the fact that the company missed its own earnings estimates for the full year.
Further scaring the market came the announcement of Puma’s new cost-cutting program with a cute marketing name. The company expects that the announced cost will help it reach its goal for an 8.5 percent earnings margin before interest and taxes by 2027.
According to Reuters reporting, that’s a downgrade from Puma’s previous guidance, which sought to reach that level as early as 2025, noted Grace Smalley, an analyst at Morgan Stanley.
Puma cited “personnel expenses” as part of the cost-cutting program, suggesting there could be job reductions, but it did not offer further details.
“Wall Street analysts will probably now slash their earnings estimates for 2025, which will weigh on the stock,” James Grzinic, an analyst at Jefferies, wrote in a note that Reuters obtained.
At Barclays, Analyst Wendy Liu said in an investor note, “While we note that Puma will continue to make strategic investments in its brand to accelerate growth, we wonder if the incremental effort on cost control will dilute management’s focus on growing the business among increasing competition.”
Deutsche Bank (DB) shared its take in an early morning note, “In our view it may be hard to achieve the brand elevation strategy and get sufficient brand exposure whilst managing the cost base tightly.”
Puma noted in its report that it saw 2025 sales growth coming in stronger than its 2024 growth, a nod toward continuing the growth acceleration in the 2024 fourth quarter.
Still, DB lowered its price target to €55 (from €60), which implies 21x Calendar 2025 PE compared to the current ~ 15.5x estimate.
The bank reiterated its “Buy” recommendation.
Image courtesy Puma SE
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See SGB Media’s complete coverage of the early Puma report below.
EXEC: Puma Comes Up Short on 2024 Bottom Line; Sets Cost-Cutting Program
