Puma plunges 16% as Q2 loss triggers profit warning and outlook collapse

Puma shares dropped 16% after the company reported a second-quarter net loss of €247 million and significantly lowered its full-year 2025 forecast, now expecting a low double-digit sales decline and negative EBIT, a sharp reversal from previous guidance for growth. The German footwear and apparel firm cited widespread sales weakness across all regions, margin pressure, rising inventories, and the impact of U.S. tariffs, with Q2 currency-adjusted sales falling 2% to €1.94 billion. This revised outlook underscores the challenges Puma faces in a competitive market environment.

Analysis

Puma experienced a significant 16% share price decline following a severe downward revision of its full-year 2025 forecast and a disappointing second quarter. The company reported a net loss of €247 million, swinging from a prior-year profit, and missed market expectations on both revenue and earnings. The weakness was broad-based, with currency-adjusted sales falling 2% due to declines across all major geographic regions, including North America, Europe, and Greater China. While Footwear sales grew 5%, this was insufficient to offset an 11% drop in Apparel and a 6% decline in Accessories. Gross margin contracted by 70 basis points to 46.1%, pressured by promotional activity and unfavorable currency effects. A critical concern is the 10% year-over-year increase in inventories to €2.15 billion, which, as RBC Capital Markets noted, suggests increased clearance activity will be necessary. The revised full-year outlook is particularly alarming, with the company now forecasting a low double-digit sales decline and negative EBIT, a stark reversal from previous guidance for a low- to mid-single-digit sales increase and EBIT between €445 million and €525 million. This revision incorporates an €80 million impact from U.S. tariffs and highlights the significant operational and market challenges, including intensified competition from Nike's planned brand relaunch, facing the company during a reset under its new CEO.

Key Decisions for Investors

• Given the severe downward revision of full-year 2025 guidance to a low double-digit sales decline and negative EBIT, investors should anticipate sustained pressure on the stock and re-evaluate any long positions, as the previous investment thesis is now invalidated.
• Monitor Puma's inventory levels and gross margin performance closely in the upcoming quarters, as the 10% YoY inventory increase signals a high probability of margin-eroding clearance activity that could delay any return to profitability.
• Factor in the heightened competitive risk from Nike's planned brand relaunch in Autumn/Winter 2025, which could further challenge Puma's market share and pricing power during this critical operational turnaround period.