Over the past quarter, Puma accelerated shipments of footwear and apparel from its Southeast Asian manufacturing hubs to the United States in a bid to beat looming tariff hikes. This front‑loading strategy, intended to shield margins, instead created a glut on retailer shelves as demand softened. By the end of Q2, Puma’s inventory pile had swollen 18.3% year‑on‑year in constant‑currency terms, reaching €2.15 billion—its highest level in recent memory. The bulk of that increase stemmed from North America, where sales slumped 9.1% in the same quarter, hampering the brand’s ability to clear excess stock at full price.

Faced with rising storage costs and the risk of obsolescence—especially for seasonal items—the company resorted to deeper-than‑planned markdowns. Discounting across wholesale channels, which account for roughly three‑quarters of Puma’s revenue, intensified, eating into gross margins and amplifying the impact of an estimated €80 million hit to annual gross profit from U.S. tariffs. Retail partners from major chains to independent specialty stores found themselves wrestling with bloated back‑of‑store inventories even as foot traffic plateaued, compounding concerns about cash flow and shelf space allocation.

Retailers Face Margin Squeeze Amid Discounting

Wholesalers and franchise operators have felt the strain of Puma’s inventory buildup most acutely. In the U.S., key accounts such as premium athletic chains and department stores reported unseasonably high stock levels of Puma classics—like the Speedcat trainer—while awaiting clearance events. As retailers pushed aggressive promotions to move goods, their own margins narrowed: clearance racks became the primary outlet for late‑season summer styles, cutting into profitability just as they prepared for the critical back‑to‑school season.

Independent sportswear boutiques, which lack Puma’s volume leverage, were especially vulnerable. Small‑scale buyers, having anticipated only moderate tariff impacts, are now left holding unsold spring and summer lines that they cannot afford to carry into the autumn. Several retailers have publicly warned of order reductions from Puma, citing reluctance to take on further risk amid uncertain consumer sentiment. The result has been a cascading effect: Puma has trimmed its forthcoming purchase orders by double‑digit percentages to realign supply with demand expectations, directly reflecting retailers’ pullback and underscoring the challenges of balancing inventory flow in a volatile trade environment.

At the same time, broader industry dynamics have compounded pressures. Competitors such as Nike and Adidas have similarly front‑loaded imports, leading to category‑wide discount saturation. That environment has made it difficult for Puma to stand out, even as it attempts to reposition core styles and roll out new collections. Retailers juggling multiple brands have prioritized stock that sells through more predictably, often placing Puma further down their replenishment lists until clearance levels return to healthy levels.

Strategic Responses and Outlook

In response to these headwinds, Puma’s leadership has launched a multi‑pronged reset for 2025 and beyond. New CEO Arthur Hoeld, who took the helm on July 1, is spearheading a “next‑level” efficiency programme aimed at optimizing the supply chain, improving demand forecasting, and tightening inventory controls. An €85 million one‑off restructuring charge has been earmarked for early cost savings, including 500 job cuts, with the goal of lowering the break‑even inventory threshold.

On the pricing front, Puma is preparing modest retail price increases for Q4 to recoup part of the tariff burden, although the exact quantum is being calibrated against consumer elasticity and competitive positioning. Meanwhile, the company is accelerating its shift away from Chinese manufacturing—where tariff exposure is highest—toward lower‑risk sourcing in Vietnam, Cambodia, and Indonesia, currently accounting for the vast majority of goods destined for the U.S. market.

Partnerships with key retail customers are also being renegotiated to include joint inventory‑management initiatives and more dynamic replenishment models. By sharing near‑real‑time sales data, Puma aims to reduce lead times and tailor production to actual sell‑through rates rather than forecasts alone. In addition, a pilot with select omni‑channel partners will test automated stock‑balancing tools, shifting inventory across the network in response to local demand spikes.

Analysts caution, however, that these measures will take time to bear fruit. With Puma now expecting a mid‑ to high‑single‑digit decline in full‑year sales and a reported operating loss for 2025, the company faces a crucial test of its ability to restore brand momentum while right‑sizing inventories. Retailers, for their part, are watching closely: as Puma realigns its assortment and discounting strategies, stores must decide whether to re‑invest in the brand or pivot toward better‑selling alternatives.

The coming months will be pivotal as Puma and its retail partners navigate the twin challenges of trade‑driven cost pressures and residual post‑pandemic stock overhang. Success will hinge on the brand’s ability to match supply precisely to demand, maintaining a lean inventory posture without sacrificing shelf availability—or risking fresh markdown cycles that further erode profitability.

(Adapted from USNews.com)