On April 30, German sportswear brand PUMA reported operating profit for the first quarter of 2026 that exceeded market expectations. While sales declined, disciplined inventory management and cost restructuring contributed to a clear improvement in profitability.
Revenue came in at €1.86 billion, down 1% year-over-year on a currency-adjusted basis. Meanwhile, operating profit (EBIT) rose 19.6% to €51.9 million. This outcome—profit growth despite declining sales—was primarily driven by inventory reduction and the resulting recovery in margins.
Inventory Optimization Drives Profitability
At the core of this quarter’s performance is the global inventory cleanup that has been underway over the past several quarters. PUMA has been grappling with excess inventory and an overreliance on discounting.
In response, the company initiated inventory takebacks and accelerated liquidation through selected wholesale partners as well as its own direct-to-consumer (DTC) channels. As a result, inventories declined by approximately 8.6% year-over-year to around €1.9 billion.
Speaking during the earnings presentation, CEO Arthur Hoeld commented: “The big cleanup was done primarily during quarters three and four last year,” and added, “It should all be gone by the end of 2026, and so far we have seen better-than-expected results from our liquidation strategy.”
This inventory reduction represents more than a short-term adjustment—it signals a structural shift toward full-price selling. PUMA also plans to simplify its product portfolio, aiming to reduce SKUs by a mid- to high-double-digit percentage by Spring 2028.
Multiple Factors Behind Margin Expansion
The improvement in profitability was not driven by inventory reduction alone. Gross profit margin increased to 47.7%, supported by a combination of factors including the reversal of inventory provisions, lower freight costs, and a higher share of direct-to-consumer sales.
The DTC channel expanded year-over-year, reaching 28.3% of total sales. This reflects a gradual shift away from wholesale dependency. At the same time, operating expenses were reduced, further enhancing overall efficiency and contributing to profit growth.
Strategic Tightening Behind Declining Sales
Despite improved profitability, sales remained under pressure. This reflects not only softer demand but also deliberate distribution restructuring.
In North America in particular, PUMA has been scaling back inefficient wholesale operations, which has weighed on short-term revenue. Additionally, weaker demand in sports apparel and Speedcat sneakers, as well as increased import costs linked to U.S. tariffs, have created further headwinds.
In this context, the decline in sales should be understood as part of a strategic tightening rather than purely a demand-driven issue.
Leadership and Shareholder Shifts
The year 2026 also marks a shift in leadership. Former Hugo Boss CEO and Douglas CFO Mark Langer has joined PUMA as Chief Financial Officer. Known for his experience in financial restructuring, his appointment is expected to support the company’s ongoing transformation.
At the shareholder level, China’s Anta Sports Products has acquired a 29% stake in PUMA, while the UK-based Frasers Group has also emerged as a major shareholder. These developments could introduce greater external influence over PUMA’s long-term strategic direction.
Outlook
PUMA’s latest results highlight how inventory discipline and cost control can drive profitability even in a challenging environment.
However, reducing inventory is only one part of the equation. The more fundamental question remains whether the brand can regain relevance and generate demand through compelling product innovation.
While inventory can be managed, demand must be created. How PUMA responds to this structural challenge through its creative and product strategies will be the key focus going forward.
2026 is a transition year. The true evaluation of this transformation will come from 2027 onward.
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