[News Space=Reporter seungwon lee] It has been revealed that Puma Korea Co., Ltd. (hereinafter Puma Korea, CEO Lee Na-young), the Korean subsidiary of the global sports brand Puma, continued to grow without substance due to excessive outflow of funds to its German headquarters and a failure to control costs, despite external growth in 2025.

 

Although sales increased slightly, royalty payments surged more than sixfold in a year, and with the added burden of interest on high-interest loans borrowed from the headquarters and fees, the operating profit margin remained at a low level in the 4% range.

 

It is being pointed out that the "straw effect," in which a significant portion of profits earned in the Korean market effectively flows to the German headquarters through irregular expense accounts instead of legitimate dividend procedures, is intensifying.

 

Meanwhile, Chinese sportswear company Anta Sports acquired a 29% stake in German sportswear company Puma for 1.5 billion euros (approximately 2.643 trillion won). Anta Sports previously acquired Amer Sports, which owns Hoka, Salomon, and Arc'teryx, in 2019, and also purchased the German outdoor brand Jack Wolfskin in April 2025.

 

Growth in size, stagnation in substance… Operating profit margin stuck in the 4% range

 

According to the 20th audit report submitted by Puma Korea to the Financial Supervisory Service's electronic disclosure system on April 6, the company's sales for 2025 totaled 150.8535 billion won, a 2.41% increase from the previous year (147.2976 billion won). Cost of sales decreased by 4.33% to 85.15973 billion won from the previous year (89.01913 billion won), while gross profit increased by 12.72% to 65.69376 billion won.

 

However, operating profit, which reflects internal stability, recorded 6.6739 billion won, an increase of only 0.90% compared to the previous year (6.61448 billion won). Due to operating profit growth falling short of the sales growth rate, Puma Korea's operating profit margin in 2025 was recorded at 4.42%, a decrease of 0.07 percentage points compared to the previous year (4.49%). Net profit also remained at 4.25942 billion won, an increase of only 2.96% compared to the previous year (4.13682 billion won).

 

The reason operating profit stagnated despite efforts to reduce the cost of goods sold lies in the explosive increase in selling and administrative expenses. While these expenses surged 14.24% from 51.66 billion won in the previous year to 59.01 billion won last year, operating profit increased by a mere 0.9%, presenting a stark contrast. 

 

Royalty payments skyrocketed 6.6-fold in just one year… Irregular capital outflows heading to the German headquarters.

 

Puma Korea's most painful point is the abnormal surge in royalties paid to its German headquarters (PUMA SE). In 2025, Puma Korea's selling, general, and administrative expenses were projected to reach 59,019,860,000 won, a 14.24% increase from the previous year (51,663,990,000 won), a figure approximately six times the sales growth rate. 

 

The key item driving the surge in selling, general, and administrative expenses was none other than royalties. The royalties paid by Puma Korea to its headquarters in 2025 amounted to 6.7337 billion won, a staggering 564.47% (approximately 6.6 times) increase compared to 1.01363 billion won in the previous year. This figure is even greater than the total operating profit for 2025 (6.6739 billion won). The ratio of royalties to sales revenue skyrocketed from 0.69% in 2024 to 4.46% in 2025. 

 

Puma Korea pays a certain percentage of net sales as International Marketing Contribution in exchange for the right to use the brand in Korea from PUMA SE.

 

Experts pointed out, "It is difficult to view a contract structure with common sense as royalties have surged 6.6 times while sales growth has remained at a mere 2% level." 

 

In addition, looking at the major selling, general, and administrative expense items, advertising and promotional expenses amounted to 7.07321 billion won, a 13.46% decrease from the previous year (8.17345 billion won); although marketing investment was reduced, the overall cost burden increased due to the payment of royalties to the headquarters. Employee salaries amounted to 8.59115 billion won, a 2.41% increase from the previous year (8.38889 billion won), keeping pace with the sales growth rate, while commission fees amounted to 2.11945 billion won, a 23.70% increase from the previous year (1.71339 billion won).

 

The Contradiction Between High-Interest Headquarters Borrowings and the No-Dividend Policy

 

Puma Korea is a limited liability company wholly owned by its German parent company, PUMA SE. As of the end of 2025, the company held retained earnings of 27,635,280,000 won, but did not pay a single won in dividends in 2025, following 2024 (dividend rate 0.0%). It has shown a thoroughly stingy attitude toward shareholder returns and contributions to Korean society (donations: 0 won in 2025, 40,970,000 won in 2024).

 

However, behind the decision not to pay dividends lies a high-interest debt transaction with the headquarters. Puma Korea maintains a long-term loan of 17.3 billion won from its headquarters, PUMA SE. The agreed interest rate on this loan amounts to 4.906% per annum, resulting in interest expenses alone of 855.08 million won paid by Puma Korea to the headquarters in 2025. On top of this, an additional guarantee fee of 43.64 million won was paid at an annual rate of 0.25% in exchange for receiving a loan guarantee from the headquarters.

 

As a result, the German headquarters effectively recovered a total of 7.63 billion won in the form of expenses, including royalties (6.73 billion won), interest on borrowings (860 million won), and guarantee fees (0.4 billion won), while avoiding withholding corporate tax in accordance with official dividend procedures. This amount easily exceeds the operating profit (6.67 billion won) generated by Puma Korea during the year.

 

Deteriorating financial health and potential risk factors

 

In addition to the risks associated with the headquarters-centric governance structure, warning lights are flashing across various aspects of Puma Korea's own financial indicators.

 

The most prominent risk is the increasing burden of inventory. As of the end of 2025, Puma Korea's inventory assets amounted to 29.04143 billion won, a 20.98% surge from the previous year (24.0053 billion won). Due to inventory accumulation significantly exceeding the sales growth rate (2.41%), the inventory valuation loss incurred in 2025 alone reached 1.36223 billion won. This is a factor that dealt a severe blow to profitability, especially when compared to the previous year, when the cost was offset by the reversal of inventory valuation losses (1.42812 billion won).

 

Looking at financial soundness ratios, the debt-to-equity ratio stood at 168.10% as of the end of 2025, an improvement from the previous year (238.51%), but still at a high level. The current ratio was 227.88%, indicating sound short-term solvency. Cash and cash equivalents increased to 15.36386 billion won from 10.02816 billion won in the previous year; however, this is partly due to a misleading effect resulting from working capital adjustments, such as a significant reduction in accounts payable (15.46 billion won → 6.41 billion won) and an increase in accrued expenses.

 

Legal Risks Persist… Salary Increases: Employees Get a Meager 2.4%, While Executives Get a Splurge of 23%

 

In addition, legal litigation risks persist. Puma Korea is currently a defendant in one pending lawsuit and has set aside a litigation provision of 62.74 million won in relation to it. While the company's management estimates that the outcome of the lawsuit will not have a significant impact on the financial statements, further financial and brand image damage is inevitable in the event of a loss.

 

Salaries and severance pay paid to key executives amounted to 1.75482 billion won and 173.37 million won, respectively, totaling 1.92819 billion won. This represents a 22.79% surge compared to the previous year (totaling 1.57026 billion won). Given that the salary increase for general employees was merely 2.41% and operating profits remained stagnant, raising the compensation of key executives by more than 20% makes it difficult to avoid criticism that this is a typical case of "moral hazard" and an attempt to enrich the management.

 

Is the Korean market a risk-free ATM for Puma headquarters?

 

A corporate financial analysis expert pointed out, "Puma Korea's audit report is a case that starkly reveals the typical 'national wealth outflow' structure of the Korean branches of global fashion companies," adding, "Despite having accumulated 27.6 billion won in retained earnings, there are no dividends for shareholders; on the other hand, royalties were raised 6.6 times in just one year to remit 6.7 billion won to the headquarters—exceeding the entire operating profit—and high-interest loans approaching 5% are consistently collected. This structure proves that the Korean subsidiary is being treated as a 'risk-free cash dispenser' by the headquarters."

 

It was also pointed out that "raising executive compensation by 23% in a crisis situation where operating profit is stagnant and inventory has accumulated by 21%, resulting in valuation losses, is a painful reflection showing that the opacity of corporate governance and moral hazard have reached a critical point."