Puma — The Rise and Fall and Rise Again

Startup Sapience
7 min readMay 17, 2024
Source: Youtube.com/startupsapience

I have worn Puma’s football boots for a long time now. And I can say that they are one of the best shoes I have worn on the football field. Puma has built its reputation in the sports industry and their shoes have been worn by world-class athletes such as Pelé and Maradona. However, in the mid 2010s, Puma’s stock nosedived by around 50%, but it has since then skyrocketed. Let’s dive in to see what happened.

It all started in a small town in Germany, when Adolf and Rudolf Dassler formed the Dassler Brothers Shoe Factory in the early 1920s. They started manufacturing slippers and outdoor shoes to then switch to sports shoes. Since they were one of the few sports shoe manufacturers in the area, they landed a deal to supply thousands of pairs of athletic shoes to a sports club in their town. From there, their shoes became known in the sports community, being worn by athletes at the Olympic Games in 1928. The brothers even drove to the 1936 Olympics to convince Jesse Owens to wear Dassler spikes. That moment marked the first informal sponsorship of an African American at the Olympics.

Jesse Owens 1936

Puma’s reputation shot up after Owens won four gold medals at the Olympics. The business was growing well, selling thousands of pair of shoes annually. However, the Dassler brothers had a falling out during World War 2. Adolf went on to create Adidas, while Rudolf set out to form Puma. And hats off to both of them. It’s really impressive that they both built multi-billion-dollar brands. Puma started as Ruda at first in 1948. It was the combination of Rudolf’s first and last name. But Rudolf did not really like that name for a sports shoe company. He changed it to Puma, to reflect the agile abilities of the animal. He wanted the athletes to feel that they wore a brand that would propel them to victory.

Puma’s first football boot, the Atom, was worn by German players at the first post-war football match in 1950. From there, the brand gained international recognition, becoming a staple amongst world-class athletes. Puma’s Super Atom, which launched in 1952, put the brand under the American Olympic Committee’s radar, becoming its official shoe sponsor. By 1958, Puma patented its second logo, the formstrip, which is now found on most Puma shoes. All this time, Puma had been building its track record by sponsoring world class athletes, such as Armin Hary, the then fastest man in the world.

Puma Atom 1949

Puma introduced many firsts. For instance, it was the first shoe company to use the vulcanization production technique in the 1960s. They were also the first company to use Velcro strap in their athletic shoes. The brand was at the forefront of international sports competition, with Pelé sporting them during the World Cup in Chile. Here’s my favorite part. The Number 1 logo is born. I am sure you know it. It’s the famous Puma leaping across the word logo from the right. Since then, only minor changes have been made to the logo.

Pele 1962 Chile

A slightly modified version of the Puma King, which was worn by Pelé during the 1970 World Cup, gained worldwide attention when Pelé apparently stopped to tie his boots in the finals so that the camera could focus on the shoes. Puma King has been worn by Johan Cruyff, who won the Golden Ball honors and Mario Kempes, who has won the Golden Ball too. All of that to say that, the greatest athletes on Earth have proudly won their titles whilst wearing Puma shoes. Rudolf had done an amazing job for Puma before sadly passing away in the mid 1970s. But his son, Armin, took the reins of the empire and took it to the next level.

Product innovation stayed at the core of the company. The S.p.a tech, the Duoflex sole and the Trinomic sport shoe system were created under Armin’s leadership. More athletes in the football and tennis fields had won their titles whilst wearing the Puma shoes. Diego Maradona even scored the Goal of the Century in 1986 whilst wearing the Puma King. This is the same year Puma went for an IPO. Things were on the right track for the brand, with their geographical footprint widening to nearly all the continents. But their bottom line was not quite on target. Proventus, a Swedish conglomerate, ended up buying out all of Puma’s outstanding stock in 1991 and injecting capital thereafter.

The market was getting more competitive, meaning that Puma had to invest more dollars toward R&D, like in its Puma Disc System. Marketing budget had to be increased as well. Markdowns on older shoe models ate away gross margins as the product cycle shortened rapidly. The newer product lines were priced higher, with an aim to compete with Nike and Reebok. Keep in mind that Puma originally played in a relatively lower price category. It was now punching above its weight line. All of these put Puma in the red for some time.

The leadership had to be changed and thus Jochen Zeitz was named CEO. Although he was one of the youngest CEOs at the time, his reorganization plans pulled Puma out of the red right away. Efficiencies were derived by centralizing the distribution center and merging the purchasing and product development divisions. Marketing efforts included deep market research to understand the current and future trends.

If memory serves, I think there was a Puma Street Soccer Cup game on the PlayStation. The game was also played in real life, of course. Puma capitalized on the street football trend of the 1990s, which helped it regain grounds amongst the younger crowd base. When I went through their annual reports, I noticed that they divided the years of operations into different categories. The restructuring period started by Zeitz ended in 1997. Then the investment period began. During this period, Puma started investing again in product development and marketing. Monarchy Regency took an interest in Puma and started buying shares in the company up to a point where they controlled nearly 40% of the company.

Puma Revenue 1993–2010
Puma EBIT 1993–2010

Although Puma was growing, it was still a small player in the US market. It bought its licensee in North America to change that dynamic. Logo Athletic was also acquired to provide a window on America’s professional sports leagues. By the start of the millennium, the purchase paid off as Puma was supplying the NFL and NBA teams. Puma’s contract with Serena Williams was also a good way to reach American customers. Remember our good old friend Kering. Well, they bought Puma in 2007, only to spin it off in 2018. Let’s move on to see how Puma performed in the 2010s.

Revenues were still growing until 2012. But then things took a turn for the worst. Zeitz was replaced by Franz Koch in 2011, who in turn got replaced by BJØRN GULDEN in 2013. Puma’s stock price fell by nearly 50% from its peak in 2012 to mid June 2015. Here is a summary of why that happened. Erosion in gross margin resulted from unfavorable currency exchange movement and more frequent promotional activities. Operating expenses kept rising but revenues did not follow. The brand was playing catch-up in securing sponsorship of kits in lucrative sports like football, where Nike and Adidas were scoring the biggest teams.

Puma Revenue 2011–2019
Puma EBIT 2011–2019

Puma underwent the biggest reorganization since the 1990s to reposition itself as a sports brand. Following its Forever Faster campaign that started in 2014, Puma successfully crawled its way back to profitability. They made some good moves in the football world, signing Arsenal and later on the City Football Group. Puma even prolonged its partnership with Usain Bolt. Underperforming stores were closed and the company moved away from the fashion sportswear category. All of these actions helped Puma get back on track. Revenues crossed the 5-billion-euro mark in 2019 and operating income was back on track.

Do you own any Puma shoes? What do you like about it? Do you think they can withstand competition from Nike and Adidas? As always, let us know what you think.



Startup Sapience

Startup Sapience is a documentary web series that explores the business models of promising startups and industry trends.