Puma's Pricing Balancing Act: Navigating Tariffs, Costs, and Inventory Challenges
Puma faces challenges in the U.S. market due to tariffs and rising costs. To address high inventory levels, the company is discounting and cutting future orders while planning a price hike. Despite expected global sales decline, Puma aims to reduce reliance on discounting and stabilize its inventory.
Puma is navigating complex market dynamics in the United States after rapidly increasing shipments from Asia to outpace tariffs. As a result, the German sportswear brand is currently discounting to clear excess stock while also preparing to raise prices to tackle rising costs.
The conflicting pressures encapsulate broader retail challenges as stores attempt to keep U.S. shelves filled for critical shopping periods, while also facing the delicate task of passing on increased costs amid weakening demand. Despite anticipated global sales reduction, Puma plans to adjust its orders and increase prices to counteract the impact of tariffs, slated to reduce annual gross profit by 80 million euros ($93.78 million).
Puma's inventory levels have surged by 18.3% in currency-adjusted terms, largely driven by North America, where sales have declined by 9.1%. CEO Arthur Hoeld projects significant overhauls by 2025, with hopes to navigate a competitive landscape and rejuvenate brand momentum through revised strategies in the coming years.
(With inputs from agencies.)
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