Arne Freundt Outlines His Vision for Puma’s Next Chapter
The newly named chief of the German brand hopes to expand in the U.S. and China by focusing on its heritage as a performance leader.
Arne Freundt was no stranger to Puma when he took over the top post at the end of last year. A 12-year veteran of the sports brand, Freundt had served as chief commercial officer and had also held posts in corporate strategy, the global direct-to-consumer division as well as general manager of the Europe, the Middle East and Africa region. He was elevated to chief executive officer when Bjørn Gulden jumped ship to Adidas.
The 43-year-old Freundt, who signed a four-year contract with the Herzogenaurach, Germany-based company, has outlined a three-pronged strategy to make his mark as CEO. It includes elevating the brand’s positioning, increasing penetration in the all-important American market and rejuvenating the China region. While street-worthy product and collaborations such as Rihanna’s newly launched Fenty x Puma collection remain important, Freundt said performance product will also be emphasized going forward. And while Puma, which had sales of 8.5 billion euros last year, ranks third behind Nike and Adidas in most markets, Freundt is confident the brand can continue to gain traction as the company leans into its 75-year heritage and enhances its standing with consumers.
Here, Freundt lays out his plans and the opportunities for growth.
WWD: How long have you had the CEO post and how was the transition?
Arne Freundt: I’ve been CEO since November, but I’ve been with the company for 12 years. The transition has been very smooth because people know me, I know the company, I know the industry very well.
WWD: It’s a big question, but how have you put your mark on the company since you got the top job and what are your plans to move it forward?
A.F.: It’s always important to refer back to my history because I was part of drafting the strategy around “Forever Faster” with Bjørn. So obviously there’s a lot of continuation, but there’s also some evolution we need to do on our strategy. That evolution will be around three focused topics which I believe are key for future growth trajectory. Number one, I believe we need to further elevate our brand; number two, we need to win in the U.S., and number three, we need to rebound strongly in China. The last two are predominantly driven because our market share in these markets is currently too low and significantly behind our global averages, so this is also why I identified them as key for our future growth.
WWD: What sets Puma apart from the other major sports brands?
A.F.: The first big strength is our team and our corporate culture. The engagement and commitment of the employees is second to none. When you walk into a Puma office, there’s always a lot of energy and the people just love to go the extra mile. It’s the same when you talk to our partners, athletes, ambassadors, retailers, suppliers — they will always say the Puma spirit is second to none and that mindset, that culture, is hard to match. When I look at our team, they’re very intrinsically motivated and really have a huge passion for their work and for working for Puma.
Also, when I think about Puma’s strength, we have always had creative leadership. We’ve always been the brand that dares to push the envelope, dares to challenge the convention. That’s very much in the culture and even our name, Puma, shows the agility and the speed of how we are working. We have very lean structures that are very decentralized, and that makes us very fast in the way we operate as a company. That was the key idea of our founder, Rudi Dassler, when he named the company. He said, “My product should give all the athletes the attributes of a puma — the speed and the agility and the nimbleness of the cat.” That’s the mindset we are adopting internally and also with our partners.
WWD: How do you juggle performance and lifestyle, and how important is each one to the company as a whole?
A.F.: When you look at our history, we were born as a sports company. We have 75 years of history serving athletes, so it’s very clear that designing the fastest products for the fastest athletes is part of our DNA. But when you look into lifestyle, especially on the classic side, you see that a lot of the shoes that are resonating on the street have been performance shoes or sport shoes in the past. They were on the basketball courts or the tennis courts or even the running track, and now they’re resonating with street- or sport-style customers. So it’s not an either-or question for me; there’s a symbiotic relationship of making sure we are pushing the envelope further for the progressiveness of sport and celebrate our heritage as a sports company.
WWD: Is the company separated into performance and lifestyle divisions, or how is it structured?
A.F.: We’re set up according to categories because I think in the end, it’s still very important that every category team understands the specific sports and the specific consumer very well. So we have a category team for team sports with one business unit that focuses on football, one on running and training, one on basketball, and we have also a business unit focused on motorsport. Then we have a business unit focused on sports style. Then we also have a golf business looking 360 degrees at golf from an apparel, footwear and club perspective, because we are the only major sports brand that is still invested in hard goods and not only provides software, meaning apparel and footwear, but also the clubs for the game.
WWD: Which one is more important — the sport or the performance division — or are they equal in your mind?
A.F.: I would say they’re symbiotic, one cannot live without the other. Our roots are in sports and we will always be a sports company and design and develop products to make athletes faster — that’s the DNA and the credibility we have — but we will also always celebrate sports culture.
WWD: Many people are intimidated by sports companies because the athletes you showcase are so good. How do you connect with both elite athletes and regular people?
A.F.: There’s one joint principle for both the elite athletes as well as the normal everyday athlete: they are human beings and human beings have special needs, and as a company, we need to listen and understand those specific needs and make sure we service according to them. Obviously, we have elite athletes and we invite them into our labs where we study their movements, understand their physics and how we can make and engineer our products better to enhance their performance. But we also have a lot of focus group interviews to understand the needs of our everyday runner. So we are also engineering the product they need for their everyday sports.
WWD: Let’s talk about collaborations. How important are they to Puma?
A.F.: Relationships have always been important for Puma. It actually goes back to 1998 when we had our first collaboration with Jil Sander. We were the first company that really took our fashion lens into sports when we brought the two different industries together and provided a new, unexpected point of view. This goes back to what I said earlier: creative leadership pushing the envelope in the industry. We followed that up with Alexander McQueen, so we were very early working with some of the leading fashion designers back in the day, and today we are still collaborating with great ambassadors and brands. The biggest one for sure has been Rihanna and now we are going to take our second turn with her. We’re restarting our partnership in 2023 and I’m really looking forward to bringing the first product to market now.
WWD: Speaking of Rihanna, what did you learn from the first time you worked with her and what are your hopes for this time?
A.F.: We learned the first time, and we’re seeing it again, that she’s a creative genius. She has a very clear point of view and vision about the product, and she goes deep into the details to see that every single one speaks to how she envisions the product coming to life. We’re also seeing now that her resonance and how she is relevant as a fashion icon to the consumer is second to none. We saw that during the Super Bowl, the Met Gala and the Oscars; she’s always creating a lot of buzz. I had the pleasure to meet her and she’s really a hard-working mom.
WWD: When you’re considering ambassadors, what are the primary attributes you look for?
A.F.: The first thing is always that it needs to be a match, meaning it must be a personality that speaks to our Puma brand and Puma values so it’s really identifiable as a brand extension; there’s a clear DNA overlap. Then secondly, it’s about the reach and the consumer connectivity. Which kind of consumers do we want to connect with, where do we want to make an impact? So it’s not only the best match, but also who has the connectivity to the consumers we would like to speak to.
WWD: Is there anybody you’d like to work with in the future?
A.F.: There are a lot of great ambassadors and brands out there so we are constantly reviewing our roster. I feel very strongly that we have probably one of the best rosters currently in Puma history. So I’m very happy with what we have currently and there will be also some big news that we will share later this year about further strengthening that roster.
WWD: Now for some nuts-and-bolts questions: how does the mix break down between apparel and footwear and where do you see the growth coming from going forward?
A.F.: The majority of our business is footwear — it’s just over 50 percent — and that speaks to our heritage. We were born as a footwear company. The remaining percent is apparel [34.2 percent in 2022] and accessories [14.8 percent], and honestly, I see growth opportunities on both sides. We have seen, especially in the last few months with this volatile environment, that footwear is more crisis-resistant than apparel and accessories. So footwear has lately grown significantly stronger than apparel and accessories, but long term, I do see big opportunities in both sectors.
WWD: What’s the breakdown between men’s and women’s and where is the growth opportunity?
A.F.: If you look at our product structure, we have one-third women’s, one-third men’s and one-third unisex from a product collection point of view. When I look at the consumer though for sure, we will continue to put more emphasis on “her.” I think Puma always had a high affinity to her as a consumer and that’s something I would like to further strengthen. And when you look at our current product offer, you see we are going the extra mile for the female consumer, especially on the athlete side. We are the only major sports brand which currently has women’s fits in all our soccer boots, and we also see that more than 90 percent of our professional female athletes are playing in our boots. Her foot is just simply different than his, and we also believe that we can prevent injuries by doing this. But it goes all the way from women’s shoes down to the period underwear that we’re also doing, so for all life cycles of the woman as well as during sports, we want to have an adequate product offer.
WWD: How many retail stores do you operate and where are they?
A.F.: We have around 1,000 owned-and-operated retail stores globally. I think it’s important when we talk about stores and direct-to-consumer to understand our big-picture strategy. Direct-to-consumer has a complementary role for us in our commercial strategy because we have fantastic wholesale partners. But we can only tell our story and our 75 years of heritage in our own online stores and retail stores and [showcase] the depth of our assortment and different product competencies.
With our 1,000 stores, the three major countries are China, India and the U.S. where we have the biggest portfolio of stores and are continuing to strengthen the portfolio — but always with the mindset of how do we fulfill a complementary role. That can be different in mature markets where we have a very mature wholesale environment. We might only focus on flagship stores, very big churches of the brand because the [primary] distribution is being fulfilled by wholesalers. But in other markets which are very monobrand, like India and China, we need to own and operate [our own distribution] because wholesalers with differentiated assortments do not exist to the extent we know in the U.S. and Europe.
WWD: That leads me to the next question: how the business breaks down between wholesale and direct-to-consumer.
A.F.: The current business split is 23 percent direct-to-consumer and 77 percent wholesale, but it is not an objective to steer towards a number. It’s more a consequence of the strategy, which is that direct-to-consumer plays a complementary role to wholesale since we are a wholesale-first company. We have the amazing partners globally in all the different markets so we’re doing the majority of our business with our retail partners.
WWD: How many countries do you operate in and which are the most successful?
A.F.: The exact number is hard to say, but there are more than 120 countries where you can purchase Puma products. In more than 50 of them, we have our own subsidiaries with our own teams and sales forces. In the remaining ones, we rely on distributors.
WWD: Is there any region where you see future growth opportunity?
A.F.: With more than 120 countries, it’s clear we have the reach and are available in all the important markets. So it’s less about the reach and more about the penetration. When we talk about penetration, we have different strengths in different countries. In most of the markets, we are the number-three brand. In some, we’re number two, but in a few markets, we are number one or close to number one, like India where we are currently dominating. So for me, the focus is to obviously strengthen the market positioning where we are not yet the number-three brand.
WWD: How big a business does the U.S. represent?
A.F.: It’s about 30 percent.
WWD: Since growing the U.S. business is one of your strategic strategies, how big do you think it can be and how do you get there?
A.F.: We don’t disclose our market share exactly, but for sure, I see the opportunity to double our business in the U.S. based on the current penetration. And I think it’s fair to say we need to make sure we’re strengthening our brand in terms of positioning with the consumer. When you look at our trajectory, we’ve only been back into relevant U.S. sports since 2019 when we entered basketball, which was very important for us to resonate with the American consumer. And I think in that short timeline, we did make huge strides forward to really anchor ourselves as a true sports brand in the consumer mindset. We also have a fantastic relationship with Roc Nation and work with them very closely, and that will be fundamentally important for our strengthening of the U.S. business going forward. We’ve been partnering with them since 2012 and have a great relationship with Jay-Z, Emory Jones [head of lifestyle], Desiree Perez [CEO] and some of their most important athletes and ambassadors.
WWD: You named June Ambrose creative director for women’s basketball in 2020. How important has she been to your brand?
A.F.: She was not only the creative director for our New York Fashion Week show last year, but we just had a Ferrari collection together with her and an event in Miami so she has also been a great partner for the brand.
WWD: You also mentioned China earlier. It’s been such a volatile place recently; what’s going on for you there and what’s the future outlook?
A.F.: It has been a challenging market for all Western sports brands: one, due to the BCI [Better Cotton Initiative] boycott, and second, the zero COVID[-19] policy. But I think from a brand positioning point of view, we need to do a better job and clearly position ourselves as a true sports brand. Unfortunately, it’s a market where we are significantly under-penetrated — we’re not even a top 10 brand currently. For me, there’s only upside potential because we know from our brand positioning and strength in other markets that we have the potential to be at least the number-three brand in every single market. So as we reposition the brand there, we have to make sure we activate for the Chinese consumer and elevate our distribution. We’re also under-penetrated with flagship stores, which really educate the consumer about our strength and heritage.
WWD: Look into your crystal ball: where do you see Puma 75 years from now?
A.F.: Well, I probably I won’t be here unless something very special happens. But 75 years is a long time, and we’ve had some of the greatest athletes under contract, from [Diego] Maradona and Pele to Tommy Smith, Boris Becker and Michael Schumacher. But it’s not only about the athletes with whom we worked and celebrated iconic moments and iconic product – it is also what the athletes had to tell future generations. In terms of stories, I think each of the athletes had a clear story to tell and pushed the envelope forward for more diversity and inclusion and equality. If I could have a vision going forward, we need to continue to serve the athletes and amplify their messages so they inspire future-generation athletes and we find ourselves in a more diverse, equal and inclusive world.
WWD: Let’s talk a little bit about you. Do you have a mentor and what did you learn from that person?
A.F.: Over my 20 years in business, I’ve had different kinds of mentors at different stages, and most of the times they’ve been my boss. My last boss was Bjørn [Gulden]. What I learned from my first to my last mentor is that it’s always people first. The greatest ideas, the greatest vision, will never come if you don’t take care of your people.
WWD: Did you grow up as an athlete or are you an athlete now?
A.F.: Athlete goes too far — I’m an everyday athlete. I’ve always enjoyed sports and in my youth, I was into field hockey and tennis. Then when I went to high school in the U.S., I got into cross-country running and track-and-field and that’s also where my current passion is, running. When I look at Puma, I can just say I’m very proud to work for a beautiful company with an amazing 19,000 employees across the world. Every time I go on a market visit, I see that we are able to live up to that spirit across all the different countries. And that’s something that makes me very proud, and it’s a very strong foundation on which I can build.