Puma Announces Major Restructuring to Revive Business
Frankfurt-based sportswear brand Puma has announced a significant restructuring plan aimed at revitalizing its business and addressing declining sales. As part of this initiative, the company plans to reduce its global corporate workforce by 900 jobs by the end of 2026. This decision comes as part of an ongoing cost-cutting strategy that has already seen 500 roles eliminated worldwide this year.
The move is part of a broader effort to turn around Puma's performance under the leadership of its new chief executive, Arthur Hoeld. The company is facing several challenges, including shrinking market share and weak demand for its products. Additionally, the sportswear industry has been affected by US tariffs on imported goods, which have further impacted Puma's financial results.
Puma has warned of an annual loss for the period ending in July, highlighting the severity of the current situation. The company’s shares have lost more than half their value this year, reflecting investor concerns about its future prospects.
To address these issues, Puma has taken several steps to streamline its operations. These include reducing unwanted wholesale business, cutting excess inventory at retailers, and adjusting promotional activities in both e-commerce and full-price retail stores. The company is also working to reduce its reliance on mass merchants in North America.
In addition to these measures, Puma plans to improve its distribution network and make targeted investments in marketing. These efforts are expected to help the company return to normal inventory levels by the end of 2026. In the most recent quarter, inventory levels increased by 17.3% to €2.12 billion, indicating that the company is still working through excess stock.
Despite these challenges, Puma reported a decline in sales of 10.4% on a currency-adjusted basis, with revenue reaching €1.96 billion (US$2.29 billion) in the third quarter. This figure was slightly below the €1.98 billion expected by analysts, according to a company-provided poll.
However, the company remains optimistic about its long-term outlook. Puma expects to return to growth in 2027, signaling that its restructuring efforts may eventually pay off. The next few years will be critical for the company as it works to regain its footing in a highly competitive market.
Key Steps in Puma's Restructuring Plan
- Workforce Reduction: A total of 900 jobs will be cut globally by 2026, building on the 500 roles already eliminated this year.
- Cost-Cutting Measures: The company has already reduced undesired wholesale business and excess inventory at retailers.
- E-commerce Adjustments: Promotional activities in online and full-price stores have been adjusted to better align with current market conditions.
- Reduced Exposure to Mass Merchants: Puma is working to decrease its reliance on large retail chains in North America.
- Distribution Improvements: The company plans to streamline its distribution network to increase efficiency.
- Targeted Marketing Investments: Puma will focus on specific marketing initiatives to boost brand visibility and consumer engagement.
- Inventory Management: Efforts are underway to bring inventory levels back to normal by the end of 2026.
As Puma moves forward with its restructuring plan, the success of these measures will be closely watched by investors and industry observers alike. The coming months will be crucial in determining whether the company can successfully navigate its current challenges and position itself for future growth.