Puma aims to further reduce its gap to Adidas this year. The new CEO Arne Freundt sees great potential for growth, especially in China and the USA.
Even after the change from CEO Björn Gulden to Adidas, Puma wants to further reduce the gap to the ailing arch-rival. “We have accelerated our growth worldwide and across all product categories despite a volatile market environment,” said new CEO Arne Freundt in Herzogenaurach on Wednesday.
Last year, Puma was able to grow faster than Adidas. The global number three increased sales by almost 19 percent currency-adjusted to 8.5 billion euros for the first time. At Adidas, on the other hand, sales only increased by one percent to 22.5 billion euros.
This continued the development of previous years. Adidas is in a deep crisis: The China sales of the world’s number two have collapsed, the end of the cooperation with the scandalous rapper Kanye West costs billions in sales, investors complain about deficits in brand strength.
In China, Puma has some catching up to do
As a consequence, Adidas CEO Kasper Rorsted had to resign prematurely. In a step that was unusual in view of the great rivalry, the Norwegian Gulden went directly to the top of Adidas at the turn of the year. Freundt, who has been with the Herzogenaurach group since 2011 and has long been considered the crown prince, took over at Puma. In his growth strategy, he relies primarily on China and the USA, where Puma’s market shares are still comparatively small.
“In the short term, the chances that Puma will remain on the road to success are not bad,” said Thomas Jökel, portfolio manager at Union Investment. In the long term, it remains to be seen whether Freundt will make similarly good decisions as Gulden, for example by entering US basketball.
Earnings have recently grown somewhat more slowly than sales. Puma’s operating profit increased by 15 percent to 641 million euros in 2022. It even declined in the fourth quarter.
Adidas expects a difficult year 2023
The bottom line is that Puma’s profits improved from 310 to 354 million euros last year. In contrast, the profit from continuing operations at Adidas collapsed from 1.5 billion euros to 254 million euros. This fell far short of the original expectations, which were lowered several times during the year.
The development should continue in the current year even after the change of guilders. Puma expects currency-adjusted sales growth in the high single-digit percentage range for 2023. The operating result should be between 590 and 670 million euros.
Gulden, on the other hand, was the first public official act at Adidas to warn that sales this year, adjusted for currency effects, will probably fall in the high single-digit percentage range. An operating loss of up to 700 million euros is also possible. “2023 will be a year of transition to create the basis for becoming a growing and profitable company again,” said Gulden.
More: Adidas’ crisis deepens.