CEO-Letter
Dear shareholders,
2023 was a transition year for our industry. The market environment was challenging, characterized by geopolitical conflicts, volatile currencies, macroeconomic headwinds and muted consumer sentiments as well as elevated inventory levels in the marketplace. Nevertheless, PUMA was able to sustain its strong brand momentum in 2023 and win market shares, leading to another record year with revenues of 8.602 billion euros (+ 6.6% cc) and a profitability fully in line with the outlook. Without the extraordinary devaluation of the Argentinian Peso, which had a significant one-off accounting impact, our results would have been even stronger.
For PUMA, 2023 was also a transition year in which we outlined new strategic priorities to create the foundation for the continued strong growth of the company. When I took over as CEO of PUMA in late 2022 after 11 years with the company, I made my immediate strategic priorities clear: we need to elevate the PUMA brand and win in the US and in China.
On the brand elevation side, PUMA has the opportunity to further increase its relevance with consumers to win more hearts and minds. To increase our brand consideration, we need to focus on building the emotional connection between our brand mantra FOREVER. FASTER. and our consumers and execute our brand and product campaigns more consistently to increase our brand equity.
In 2023, we laid the organizational foundation by transitioning our brand management team to our global headquarters in Herzogenaurach and by announcing Richard Teyssier as new Vice President Brand & Marketing. These decisions will vastly improve and speed up alignment between the different departments, as global marketing will sit next to product, global go-to-market and our creative direction. In this new setup we are now working on a new brand campaign, which will launch in 2024 and bring to life the emotional benefit for our consumers.
Another cornerstone of our brand elevation strategy is our Fewer-Bigger-Better approach. We will focus our efforts on fewer but more impactful Tier 1 brand ambassadors at the top of our full-tier influencer strategy, and bigger marketing campaigns to increase the relevance of our brand with our consumers. We were able to already take the first big steps in 2023, by welcoming Rihanna and A$AP Rocky on the entertainment side as well as Jack Grealish, Kai Havertz, Xavi Simons, Alex Greenwood, Marcell Jacobs, and Scoot Henderson on the performance side.
Winning in the United States is another key strategic priority. It’s the biggest and most important global sports market but our market shares are currently too low. On top, the US has been a soft market overall in 2023, caused by macroeconomic headwinds and elevated inventories, in which we saw soft sales. To turn this around and win in the US, we have to elevate the brand and clearly reposition PUMA as a sports brand, create more locally relevant products and improve our distribution quality.
We have the foundation to be successful in the US. We have some of the best US athletes like LaMelo Ball, Scoot Henderson, Breanna Stewart, Christian Pulisic, Molly Seidel, Rickie Fowler and Lexi Thompson, who can give us the authenticity as a true performance brand. We have three of our four performance product teams (Basketball, Running/Training and Golf) based in the US and have a Regional Creation Center in Boston to help us cater for the demands of our US consumers. We will further reinforce our commitment to the US market by opening our LA Creative Hub in 2024.
On the distribution side, we have great partnerships in place, but we need to become more disciplined and focused on growth with our more desirable wholesale partners going forward. A repositioning of the brand will take some time, but the foundation is there and the first steps have been initiated.
To further support our new strategic direction in the US, we strengthened our organisation with the appointments of Andrew “Rudi” Rudolph and Alexa Andersen, who will lead the US sales and merchandising teams.
Finally, winning in the Chinese Market is our third strategic priority. The Chinese market was muted in 2023 and even though consumer sentiment has improved, it remained below pre-COVID levels. Nevertheless, we witnessed a gradual recovery of our business.
As is the case in the United States, it is a priority to position PUMA as a sports brand in China. Part of this strategy is to also sign the right local ambassadors from sports and entertainment, which complement PUMA’s international portfolio. In 2023, PUMA welcomed actress CC Song, basketball player Zhang Ru, soccer player Yao Wei and breakdancer Qi Xiangyu among others. We will make further exciting announcements in 2024.
To cater for Chinese consumers with the right products, PUMA will further build on its local-for-local resources in China both in terms of design and sourcing to bring the right product with local fit at an accelerated speed to the market.
PUMA also introduced a new store format, which was developed by a local agency to fit the needs of Chinese consumers and to deliver improved store productivity. After successful pilots, PUMA has started the roll-out of the new store concept in 2023.
With Shirley Li as General Manager, David Lu as Commercial Director and Robbie Cai as Marketing Director, we appointed three experienced local Chinese leaders to carry out our strategy in the country.
Although brand positioning and rebalancing distribution quality takes time, I’m encouraged by the progress we have already made both in China and the US over the past months.
Our people and our partnerships are key to our success as a company. To constantly improve our global distribution quality, we worked closely with our wholesale partners to give them the best possible service and make our products stand out in a multibrand environment. Being the best partner to our retailers was once again crucial in 2023, as we jointly needed to work through elevated inventory levels in this transition year. I am happy with the progress we achieved together in 2023 by cleaning up the marketplace and providing the foundation for a less promotional year in 2024.
Our partnership approach also applies to our sourcing strategy, which is based on the long-term cooperation with our suppliers along the entire value chain. This guarantees the consistent high quality of our products, positions us well for future growth and creates a dependable supply chain in times of many global uncertainties. In this context, we were excited to welcome our key suppliers to our first global supplier summit in Herzogenaurach since 2010 to align our strategies and strengthen our partnerships.
Putting our people first is an important part of our corporate strategy and we were thrilled to be named a global Top Employer in 2023. We received this award, which follows a comprehensive survey by the Top Employers Institute, for the first time in North America and Latin America and once more in Europe and Asia Pacific. The fact that most of our important senior vacancies are filled with fantastic internal candidates is further proof of the great job we do on people development.
Finally, 2023 marked our 75th anniversary. In 1948, our founder Rudolf Dassler founded the company with the idea to create the best products for the athletes, always with a vision that these products would help our athletes to become fast and agile, like a puma. We still live by this vision today. We celebrated that special milestone together with our 20,000 employees worldwide. It was great to see how this anniversary was celebrated in all our offices across the world throughout the global PUMA Family.
I would like to thank everybody in the PUMA family – our employees, our wholesale partners, our suppliers, our ambassadors and athletes – for their contribution and dedication to the company. I’m also very grateful to our supervisory board, which has supported us in executing our strategy and position PUMA for future growth. I would also like to thank you, our shareholders, for your continued support and trust.
I really look forward to 2024, which will be the Year of Sport with important sports events such as the Olympic Games, Euro 2024 and Copa America which give us great brand visibility. We continue to be the challenger in the market with the ambition to continue our success story and to gain further market share.
Arne Freundt
Chief Executive Officer PUMA