Puma launches cost-cutting drive after 2024 net profit disappoints

By Helen Reid

LONDON (Reuters) - Sportswear brand Puma announced a cost-cutting programme on Wednesday after reporting 2024 net profit below the prior year's level, missing its expectations.

Net profit was 282 million euros ($294 million) for the year, compared to 305 million euros in 2023, Puma said in preliminary results released after markets closed, adding that higher interest payments on its debt hurt income.

"While we achieved solid sales growth in 2024 and made meaningful progress on our strategic initiatives, we are not satisfied with our profitability," said Arne Freundt, CEO of PUMA, without saying what its expectations were.

Freundt added that he expects stronger growth in 2025 than last year.

Net profit was also impacted by higher non-controlling interests, Puma said. Its joint venture with United Legwear & Apparel Co (ULAC) did well, a spokesperson said, but it could only book 51% of the profit, with the remainder going to ULAC.

The cost-cutting programme aims to get Puma back to an earnings before interest and tax (EBIT) margin of 8.5% by 2027. Puma aims for a 10% EBIT margin in the long term. The EBIT margin for 2024 was 7.1%.

Puma said the programme would look for savings in areas like personnel expenses, but a spokesperson said Puma aims to keep its headcount stable and has no global target for layoffs.

"We will ensure that we allocate resources where we need them to drive our growth," the spokesperson said in an email.

For the fourth quarter, a key shopping period, Puma's sales grew by 9.8% in currency-adjusted terms, to 2.289 billion euros ($2.38 billion).

Over 2024 as a whole, sales were up by 4.4% in currency-adjusted terms, to 8.817 billion euros.

Puma's fourth-quarter sales grew by 14.3% in Europe, Middle East and Africa region, and 7.4% in Greater China. Sales of footwear, Puma's biggest category, were up 9.2% over the quarter while apparel sales grew by 8.8%.

Puma will release its full fourth-quarter and annual sales on March 12.

($1 = 0.9602 euros)

(Reporting by Helen Reid;Editing by Elaine Hardcastle)