Puma: Disappointing Profitability Brings New Cost-Cutting Plan; Shares Attractive

Puma released mixed preliminary fourth-quarter and full-year results as its sales beat expectations, but its profitability fell short. In conjunction with this release, it announced a cost efficiency program called “nextlevel,” which is likely to include layoffs and other cuts. Coupled with anticipated higher sales through brand investments, Puma believes that these cuts will lead to an 8.5% EBIT margin by 2027, which aligns with our model. In the long run, the company targets a 10% EBIT margin, which is a bit higher than our 9.5% forecast. We expect to learn more about the plan when the company reports its full results on March 12.