Puma’s growth accelerated in the third quarter to a 5 percent currency-adjusted (ca) gain from 2.1 percent in the second quarter, led by a recovery in footwear demand. Arne Freundt, CEO of Puma, said on a media call, “I’m very confident to say that we are leading the low-profile trend.”

Puma’s footwear category strongly returned to growth in the third quarter ended September 30, jumping 9.3 percent (ca) to €1.24 b million after seeing a flat performance in the second quarter. The gains were driven by growth in Performance categories, led by Football and Running, as well as increases in Sportstyle, led by Core and Kids.

Freundt has made improving Puma’s credibility in performance as a key pillar to driving sustainable growth with its past positioning being too lifestyle-driven. Freundt said, “We need to have great product innovations, have fantastic ambassadors and show very strongly with our partners.”

Among models, he said that in run, the Deviate NITRO 3 running model in both in the Elite and everyday running version is “really performing great.” He noted that the Deviate NITRO 3 at this past weekend’s New York City Marathon was the most worn brand among the top-twenty top finishers for both the male and female runners, according to running platform Run Outside Online.

Freundt said, “As some of our athletes are saying, this is like having rockets on your feet,” said Freundt. “And also, when you look at this progress which we’re making, please remember one thing, we are only four years back into running.”

In Performance, Puma also introduced its “fastest boot,” Ultra, in soccer, the MagMax max-cushioning model in running, and the fourth iteration of LaMelo Ball’s signature basketball shoe, MB.04, in basketball that continues to be a bestseller.

Other highlights on the Performance side included the Paris Olympics 2024 marking the most successful games in Puma’s history with Puma athletes winning 66 medals, including 19 Gold in Olympics and Paralympics, all of them wearing Puma Nitro technology.

On the Sportstyle Prime side, Freundt highlighted four major trends – terrace/football, court/skate, low-profile and progressive running/vis-tech – that are expected to support footwear growth. Currently, Puma is seeing strength in terrace and skate with its Palermo and Suede XL models as well as LaMelo Ball’s off-court sneaker LaFrancé.

Freundt said Puma is looking to build on further momentum in the low-profile trend with the Speedcat just become released commercially in major accounts such as Foot Locker, JD Sports and Snipes after seeing strong sell-through in elevated distribution channels. Freundt said Speedcat is particularly appealing to women and Puma is growing “very confident” it can scale the Speedcat similar to its past Palermo model. Freundt said, “Going forward, we have a lot of more colors, materials and seasonal execution to come into play, which gives us the opportunity to really scale up our Speedcat offering and realize the opportunity.”

Other opportunities in footwear in Sportstyle include the A$AP Rocky’s latest designs of Mostro and Rihanna’s new Fenty x PUMA Avanti sneaker campaign featuring Romeo Beckham.

In other categories, sales in apparel decreased by 0.7 percent (ca) to €763.6 million while sales in accessories grew 2.9 percent (ca) to €304.2 million. Freundt said that in apparel, strength in the Performance business withing football and core apparel categories offset weaker sales in the Sportstyle Prime as undergoes a transition and seeks to improve its positioning against training opportunity.

Overall, sales reached €2.31 billion in the quarter, down 0.1 percent on a reported basis and below the €2.36 billion expected on average by analysts due to currency headwinds and some softness in China. With sales and EBIT meeting expectations as well as a strong orderbook for Q4, Puma reiterated its full-year 2024 outlook.

Region Summary

Sales in the Americas region climbed 11.4 percent (ca) to €872.2 million, with both U.S. and Latin America contributing to the growth. As anticipated, the U.S. market returned to growth in Q3 with North America showing a gain of 6.1 percent, accelerating from an increase of 1.3 percent in Q2 and previous declines for several quarters. For the back half, Puma North America is expected to show a gain in the low-to mid-single digits. Latin America grew 20.4 percent during the quarter while continuing to be impacted by the ramp-up of warehouse operations.

The Asia/Pacific region recorded sales growth of 3.0 percent (ca) to €430.4 million, showing a sequential improvement despite softer consumer demand in Greater China. Growth in Greater China slowed to 1.3 percent from 7.6 percent. Excluding China, APAC growth was up 3.8 percent. Part of Greater China’s softness reflects Puma’s move to reduce selling to brick & mortar accounts amid the slowdown to avoid overstock issues. Direct-to-consumer (DTC) continued to grow low double digits in China. Mainland China overall still performed Hong Kong and Taiwan.

In the EMEA region, sales increased 0.8 percent (ca) to €1,005.5 million, driven by continued growth, up 2.2 percent, in Europe, which was partially offset by a decline in EEMEA due to muted consumer sentiment in the Middle East tied to ongoing Israel conflicts and a strong prior-year quarter. EEMEA’s growth was 64 percent (ca) in Q3 2023. The EMEA region is expected to accelerate growth in Q4 and the EEMEA is expected to return to positive territory.

Channel Summary

Puma’s Wholesale business returned to growth, improving by 1.5 percent (ca) to €1,728.2 million. The strong focus on full-price sell-throughs in the first half supported a stronger sell-in in the second half. Puma’s DTC business grew 17.0 percent (ca) to €580.0 million, in line with the strong year-to-date trajectory, reflecting continued brand momentum. Sales in owned and operated retail stores increased 12.8 percent (ca), and e-commerce expanded 26.4 percent (ca). This resulted in an increased DTC share of 25.1 percent against 22.7 percent a year ago.

Income Statement Highlights

Gross margins improved 80 basis points to 47.9 percent due to favorable product mix, freight and sourcing prices, partially offset by ongoing currency headwinds and higher promotional activities in certain markets in Latin America and EEMEA.

Operating expenses (OPEX) increased 1.1 percent to €873.4 million. The increase was mainly driven by the continued growth of its DTC business, warehouse ramp-up costs and digital infrastructure projects, partially offset by lower bonus-related marketing payments and a shift of marketing investments to Q4 2024. Non-demand generating costs continued to be strictly controlled. Currency headwinds also weighed on the OPEX ratio, which increased by 50 basis points to 37.8 percent.

EBIT inched up 0.3 percent to 237.0 million, mainly due to an improved gross profit margin. The EBIT margin was 10.3 percent against 10.2 percent.

Net income decreased 3.0 percent to €127.8 million, or €0.86 a share. The decline versus the EBIT growth was mainly due to a higher net income from non-controlling interests due to a stronger sock and bodywear business in the U.S.

Outlook

Looking ahead, Puma said that based on the results of the first nine months of the year and supported by building brand momentum as well as by “strong orderbook” for the remainder of the year, it reiterated its outlook for the full year calling for mid-single-digit ca sales growth and an operating result (EBIT) in the range of €620 million to €670 million, up from €621.6 million the prior year. Puma also continues to expect a gain in net income similar to the EBIT gain.

Asked about holiday spending, Freundt said the brand’s performance over Golden Week holiday and the first weeks of Singles’ Day give him confidence that China’s revenues in the fourth quarter will rebound. He adds, “And also talking to the retailers, both in Europe and U.S., I think we are quite confident about the demand going into the important shopping season.”

Asked about the potential impact of tariffs with the reelection of Donald Trump as U.S. president, Freundt said the multinational structure of the company’s suppliers allow it to “quite easily” shift volumes from one country to another within the same supplier group when it sees duty increases in certain locations.

“We feel that for this volatile environment overall, we are very well positioned to react swiftly if certain tariffs are increasing in certain countries,” he said.