Shares in Puma climbed on Tuesday after the company confirmed it is on track to meet its full-year targets and announced efforts to streamline its inventory levels.
Shares of the German sporting-goods company rose by 4.3% to EUR52.98 at 0913 GMT, following the positive news.
Strong Growth Expectations for Q3
For the third quarter, Puma expects solid sales growth in the high single-digit percent range, adjusted for currency fluctuations. The company reaffirmed its operating result forecast of between 590 million euros and 670 million euros ($629.5 million and $714.9 million).
Normalization of Inventory Levels
Thanks to sustained demand for its products, Puma has successfully reduced its inventory by 20% compared to the previous year. The company stated that inventory levels are now deemed appropriate.
Sales Performance and Profitability
In the third quarter, Puma's sales declined by 1.8% to EUR2.31 billion mainly due to currency effects. However, when adjusted for currency fluctuations, sales showed a growth of 6%. Notably, Puma experienced growth in Europe, the Middle East and Asia, Asia-Pacific, and the Americas. The operating result dropped by 8.3% to EUR236.3 million due to adverse currency effects.
Investor Sentiment and Industry Analysis
While Puma's inventory reduction provides hope for bullish investors, UBS analysts caution against potential challenges stemming from slowing direct-to-consumer sales. However, Baader Helvea analyst Volker Bosse remains optimistic about the global trend of healthier living, casual fashion, and people's enduring interest in sports. Despite macroeconomic challenges and weak consumer confidence, the analyst believes these factors will continue to support the industry.
Puma's positive performance follows Nike's recent report of profit above expectations for the latest quarter. Additionally, Adidas upgraded its guidance for the entire year just last week. However, analysts highlight that the sporting-goods sector still faces obstacles such as muted sales, foreign-exchange headwinds, and elevated cost levels.