Puma's Price Predicament: Navigating U.S Market Challenges

Puma, the renowned German sportswear brand, is facing a complex challenge in the U.S. market, juggling the dual pressure of rising costs and declining demand. To navigate this landscape, Puma has resorted to discounting excess inventory and is contemplating price hikes later this year. These moves come as the company grapples with weaker than expected sales and increasing stock levels, particularly in North America, which recorded a 9.1% drop in sales in recent months.

On Friday, Chief Financial Officer Markus Neubrand highlighted the company's strategic shift towards adjusting future orders to align with anticipated demand. Despite these efforts, Puma anticipates a 10% dip in global sales, partly due to elevated inventory levels, which have cut into the company's gross profits by an estimated 80 million euros. Analysts are closely watching Puma's ability to push through price increases amidst a backdrop of muted brand momentum and competitive pressures in the U.S. retail environment.

While Puma isn't alone in this predicament, as competitors like Nike, Lululemon, and On have already started passing on higher import costs to consumers, the response from the market remains uncertain. Adding to the brand's woes, Puma's recent product launches, including the Speedcat sneaker, have underperformed, prompting new CEO Arthur Hoeld to signal 2025 as a 'reset' year in hopes of revitalizing the company's fortunes.

(With inputs from agencies.)