Company Reports

We view Puma as a leader in global activewear but do not believe it has achieved a competitive advantage. Since 2014, Puma’s annual sales have risen to more than EUR 8 billion from EUR 3 billion as the company has expanded distribution, introduced new products, and stepped up its marketing. At approximately 2.6%, the brand had the fifth-largest share (by sales) of the fragmented but attractive $396 billion sportswear market in 2023, according to Euromonitor. However, wide-moat Nike and narrow-moat Adidas are the leaders by wide margins in most regions, and we do not expect Puma will gain significant share on either. Moreover, the company faces threats from fast-growing competitors like narrow-moat activewear firms Lululemon, Anta, and Li Ning.

No-moat Puma's first-quarter sales and profitability aligned with our estimates, which were updated after its comprehensive investor day in March. Although sales fell 4% in the quarter, the firm held to its full-year guidance for mid-single-digit percentage currency-neutral sales growth and EBIT of EUR 620 million-EUR 700 million. Moreover, management's commentary suggests that sportswear demand in key markets might be picking up slightly faster than we'd anticipated. As a result, we're lifting our 2024 expectations for sales growth to 3% from 2%, for EBIT to EUR 648 million from EUR 641 million, and for EPS to EUR 2.29 from EUR 2.19. After these changes, our fair value estimate rises to EUR 47.50 from EUR 46.50 but is below Puma's share price after a roughly 11% increase on the report.

We view Puma as a leader in global activewear but do not believe it has achieved a competitive advantage. Since 2014, Puma’s annual sales have risen to more than EUR 8 billion from EUR 3 billion as the company has expanded distribution, introduced new products, and stepped up its marketing. At approximately 2.6%, the brand had the fifth-largest share (by sales) of the fragmented but attractive $396 billion sportswear market in 2023, according to Euromonitor. However, wide-moat Nike and narrow-moat Adidas are the leaders by wide margins in most regions, and we do not expect Puma will gain significant share on either. Moreover, the company faces threats from fast-growing competitors like narrow-moat activewear firms Lululemon, Anta, and Li Ning.

No-moat Puma’s fourth-quarter results and soft 2024 guidance were unchanged from its announcement on Jan. 24 (see our note). As we revised our financial model after that report, we do not expect to make any material changes to our forecast or our EUR 46.50 fair value estimate, leaving shares slightly undervalued. Although the year is off to a slow start, we are encouraged by Puma’s product release plans and the boost it should get from the upcoming UEFA European Championship in its home country of Germany. The firm will provide more details on its strategy at an upcoming investor event.

We view Puma as a leader in global activewear but do not believe it has achieved a competitive advantage. Since 2014, Puma’s annual sales have risen to more than EUR 8 billion from EUR 3 billion as the company has expanded distribution, introduced new products, and stepped up its marketing. At approximately 2.6%, the brand had the fifth-largest share (by sales) of the fragmented but attractive $396 billion sportswear market in 2023, according to Euromonitor. However, wide-moat Nike and narrow-moat Adidas are the leaders by wide margins in most regions, and we do not expect Puma will gain significant share on either. Moreover, the company faces threats from fast-growing competitors like narrow-moat activewear firms Lululemon, Anta, and Li Ning.

No-moat Puma issued preliminary 2023 fourth-quarter results and initial 2024 guidance below our forecast, sending its shares down 10% on Jan. 24. The fourth-quarter results were negatively affected by the 54% devaluation of the Argentine peso in December, while the 2024 outlook disappointed because of depressed consumer demand and macroeconomic challenges. We expect to reduce our fair value estimate of EUR 49 on Puma’s shares by a mid-single-digit percentage but now view them as slightly undervalued after their roughly 30% drop over the past month.

We view 75-year-old Puma as a leader in global activewear but do not believe it has achieved a competitive moat. Since 2014, Puma’s annual sales have risen to more than EUR 8 billion from EUR 3 billion as it has expanded distribution, introduced new products, and stepped up its marketing. At approximately 2.6%, the brand has fifth-largest share (by sales) of the fragmented, but attractive, $396 billion sportswear market in 2023, according to Euromonitor. However, wide-moat Nike and narrow-moat Adidas are the leaders by wide margins in most regions, and we do not expect Puma will gain significant share on either. Moreover, the company faces threats from fast-growing competitors like narrow-moat activewear firms Lululemon, Anta, and Li Ning.

After recent weakness on concerns of unsettled economic conditions in the U.S. and China, Puma’s shares leapt about 8% after its currency-neutral sales increased 6% in 2023’s third quarter. Moreover, it reiterated its full-year guidance for high-single-digit constant-currency sales growth and operating income of EUR 590 million-EUR 670 million. As our forecast is within this range, we do not expect to make any material change to our EUR 49 per share fair value estimate, leaving shares as fully valued. Although we rate Puma as a no-moat firm, we believe it has strengths, including the popularity of its footwear (sales up 11% currency-adjusted in the quarter) and collaborations with popular labels like Rihanna’s Fenty.

We view 75-year-old Puma as a leader in global activewear, but do not believe it has achieved a competitive moat. Since 2014, Puma’s annual sales have risen to more than EUR 8 billion from EUR 3 billion as it has expanded distribution, introduced new products, and stepped up its marketing. At 2.5%, the brand had the fourth-largest share (by sales) of the fragmented, but attractive, $372 billion sportswear market in 2022 (Euromonitor). However, wide-moat Nike and narrow-moat Adidas are the leaders by wide margins in most regions, and we do not expect Puma will gain significant share on either. Moreover, the company faces threats from fast-growing competitors like narrow-moat activewear firms Lululemon, Anta, and Li Ning.

No-moat Puma’s second-quarter results were in line with our expectations as 20% sales growth in Europe, the Middle East, and Africa more than offset an 8% sales decline in the Americas. Moreover, the firm reaffirmed its full-year guidance of high-single-digit percentage currency-neutral sales growth and an operating margin of EUR 590 million-EUR 670 million. We may lift our respective 6% and EUR 621 million estimates to account for the brand’s solid momentum in Europe and upcoming product releases (including its Fenty collaboration) but would look for a more attractive entry point given that shares trade above our EUR 49 fair value estimate (which we may revisit).

We are initiating coverage on sportswear firm Puma with a no-moat rating and a fair value estimate of EUR 49 per share, leaving shares valued fairly. Our Morningstar Uncertainty Rating is High, and our capital allocation rating is Standard.

We view 75-year-old Puma as a leader in global activewear, but do not believe it has achieved a competitive moat. Since 2014, Puma’s annual sales have risen to more than EUR 8 billion from EUR 3 billion as it has expanded distribution, introduced new products, and stepped up its marketing. At 2.5%, the brand had the fourth-largest share of the fragmented, but attractive, $372 billion sportswear market in 2022 (Euromonitor). However, wide-moat Nike and narrow-moat Adidas are the leaders by wide margins in most regions, and we do not expect Puma will gain significant share on either. Moreover, the company faces threats from fast-growing competitors like narrow-moat activewear firms Lululemon, Anta, and Li Ning.