Puma’s Strategic Shift in Supply Chain Management
Recently, the German sportswear brand Puma announced a significant reduction in the quantity of merchandise it ships to the United States from China. This decision is a response to the evolving landscape of tariffs and trade policies. According to Chief Financial Officer Markus Neubrand, the company has reduced its shipments from China to only 10% of the total products aimed for the U.S. market, with plans to decrease this figure further. In addition, Neubrand hinted at a possible increase in prices in the U.S. market, signaling an adaptation to these changing economic conditions.
Leadership Changes and Profit Warnings
Puma is currently undergoing a pivotal transition, accentuated by the recent replacement of its CEO after a series of profit warnings that indicated struggles in achieving consistent sales growth. The company announced the appointment of former Adidas sales chief Arthur Hoeld, who will officially take the reins on July 1. This leadership change is expected to revitalize the brand and enable it to reclaim some of the market share it has lost to rivals like Adidas.
Sales Performance Amidst Challenges
In its latest financial report, Puma disclosed that first-quarter sales reached 2.08 billion euros ($2.35 billion), marking a modest increase of 0.1% compared to the same quarter last year. This number slightly exceeded analysts’ average forecast of 2.04 billion euros. While Puma maintained its outlook for 2025, it made it clear that this projection does not account for the potential impacts of U.S. tariffs, a crucial factor that has influenced market perceptions. Following this report, Puma’s shares rose 8%, although it’s noteworthy that the stock has still fallen 43% since the beginning of the year.
The Tariff Landscape
Tariffs remain a significant concern for Puma and its competitors, including Adidas and Nike. President Donald Trump’s potential reinstatement of steep tariffs on Southeast Asia, currently postponed until July, could heavily impact the brand’s U.S. operations. In light of these developments, the CFO emphasized the importance of monitoring competitors’ pricing strategies before making any moves on pricing for Puma products. “We don’t want to be the leader in terms of the pricing change in the U.S. market,” Neubrand stated during a press call.
Global Sourcing Strategy
Puma’s supply chain strategy reflects a broader trend where the company is pivoting towards sourcing its products from Vietnam, Cambodia, and Indonesia, which have become the main suppliers for U.S. sales. As it stands, 28% of Puma’s products are still manufactured in China, with Vietnam contributing an additional 26% and Cambodia producing 16%. This adjustment is part of an overarching strategy to mitigate risks associated with U.S. tariffs and to stabilize the company’s presence in the competitive market.
Inventory Management and Business Performance
In terms of inventory management, Puma reported a 21% increase in inventories at the end of the first quarter compared to the previous year. This rise in stock levels occurred as the company moved to deliver more goods to the U.S. market in anticipation of tariff implementations. However, there was a notable decline of 3.6% in wholesale business due to weaker sales to retailers in the U.S. and China. On a brighter note, Puma’s direct-to-consumer segment showed resilience, with online sales growing by 12% to reach 546.5 million euros.
Cost-Cutting Measures
To navigate its ongoing challenges and improve profitability, Puma has initiated a global cost-cutting strategy, which includes plans to eliminate 500 corporate positions by the end of the second quarter. This move aims to streamline operations and reduce expenditures as the company adapts to its current market conditions and seeks to lay a stronger foundation for future growth.
Despite the hurdles it faces, Puma’s strategic initiatives reflect a determined approach to balance immediate challenges with long-term goals in a highly competitive sportswear market.
