Puma raises revenue target

Puma has increased its full-year forecasts for the second time in three months as the German sporting-goods maker brought forward figures showing a jump in quarterly sales and profit. The shares surged up to 7%, extending their gain this year to 44%.

Currency-adjusted revenue for 2017 will rise by 12% to 14%, the company said in an unscheduled statement, up from a prior forecast of low double-digit growth.

Like German rival Adidas, Puma has been having a revival in the US market, helped by a shift towards retro styles and away from basketball shoes which have hurt Under Armour and dented Nike’s success.

Puma boosted its projection for operating profit to a range of €205m to €215m, from €185m to €200m.

The company, which had already raised the forecasts in April, is into the fourth year of a turnaround, balancing sportswear and street styles with endorsements from celebrities including sprinter Usain Bolt and singer Rihanna.

Puma said it expects 2017 earnings before interest and taxation to come in at €205m to €215m, while it confirmed it expects net earnings to improve significantly.

“Their marketing spend and investments seem to be paying off and the brand is attractive to consumers,” said Volker Bosse, an analyst at Baader Helvea in Munich.

“Comparables will get tougher in the second half, but the turnaround is taking shape,” said Mr Bosse.

Second-quarter sales rose 17% to €968.7m, representing growth of 16% at constant exchange rates, the company said.

Operating profit jumped to €43.4m from €11.9m a year earlier. Puma said it will release full results for the quarter on July 26.

Puma chief executive Bjoern Gulden in February disparaged his company’s operating margin of 3.5% as ridiculously low when compared with larger rivals, saying he must strive to lift the measure to between 8% and 10% of sales.

Analysts expect Puma to lift sales by 13% this year to €4.11bn, while making an operating profit of €207.3m, which would translate into a margin of about 5%.

Shares of luxury conglomerate Kering, which owns Gucci and 86% of Puma, rose up to 1.4% following the statement.

Puma’s improving performance is likely to add to speculation that Kering may seek to sell its controlling stake, Berenberg analysts Zuzanna Pusz and Mariana Horn said in a note.

Puma’s long-term opportunity lies in lifting its operating margin closer to those of its peers, they said.

Bloomberg and Reuters

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