The eternal competition in the Franconian province has a new punchline: Puma has left its local rival Adidas behind in terms of profits with a good third of sales.
Things are going well for the smaller of the two Franconian sporting goods giants: Puma had a record year in 2022 and outperformed its much larger local rival Adidas in terms of profits. Sales increased by 18.9 percent to 8.465 billion euros and consolidated profit by 14.2 percent to 354 million euros, as Puma announced on Wednesday. “2022 was a record year for Puma,” said the new CEO Arne Freundt in Herzogenaurach. “We are in much better shape than we were a few years ago.” By 2025, the sales hurdle of ten billion euros should be cleared.
The local rival Adidas, which is almost three times larger in terms of sales, expects a result of 254 million euros for the past year and is concerned about staying in the profit zone this year, mainly because of the problems with the scandalous rapper Kanye West. Adidas plans to present its final figures for 2022 next week. Puma is currently number three in the industry worldwide behind the US industry leader Nike and Adidas.
Relationship with Adidas normalized
Adidas and Puma, once founded by the rival brothers Adolf and Rudolf Dassler, were long considered at odds, but the relationship has normalized in recent years. For the current year, the successor to Norwegian Björn Gulden, who surprisingly switched to competitor Adidas at the beginning of the year, has set himself the goal of continuing to grow and gaining market shares in the large markets of China and the USA. In addition, brand awareness is to be increased.
In China and the US, Puma lags far behind the two larger brands Nike and Adidas than the global average. “I don’t see any reason why we shouldn’t have an average market share there,” said Freundt. In India, however, where Puma relies heavily on the regionally popular sport of cricket, the company is the market leader.
Focused on growth areas
In addition to the core sport of football – the big cat is emblazoned on the jerseys of Borussia Dortmund, Manchester City or Olympique Marseille and on the shoes of players like Neymar Jr. or Kingsley Coman – Puma wants to increasingly focus on growth areas. The entry into the US basketball professional leagues and the business in Formula 1, where Puma sells fan articles, went excellently – decisions that Puma still owes to his ex-boss Gulden, who is now working for competitor Adidas. In the entertainment sector, musician Rihanna is back as a brand ambassador.
Freundt is hoping for more good business from a new focus on running shoes. The company can also not be satisfied with sales from its classic line. With a company history spanning 75 years, Puma has a huge catalog of classics, such as tennis shoes. This must be better used.
Overall, however, Freundt expects weaker growth due to the difficult environment against the background of the Ukraine war and high inflation. Sales will increase by about a single-digit percentage this year. The bottom line is that earnings should remain roughly stable. Consumers have become more insecure.
In addition, Puma fears a price war on the sporting goods market. Inventory levels were high throughout the industry, more so for clothing than for shoes. This leads to a “competitive market environment,” said Puma. Inventories could normalize around mid-year, Freundt said.
Source: Stern
