Puma boosts its forecasts as quarterly sales surge

Bloomberg

Puma SE 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.
Currency-adjusted revenue for 2017 will rise by 12 percent to 14 percent, the company said in an unscheduled statement, up from a prior forecast of low double-digit growth. Puma boosted its projection for operating profit to a range of 205 million euros to 215 million euros, from 185 million euros to 200 million euros.
The company, which had already raised the forecasts in April, is into the fourth year of a turnaround, balancing sportswear and street styles with the help of endorsements from celebrities including sprinter Usain Bolt and singer Rihanna. The shares surged as much as 7.1 percent to 364.90 euros, extending their gain this year to 44%.
“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.”
Second-quarter sales rose 17 percent to 968.7 million euros, representing growth of 16 percent at constant exchange rates, the company said. Operating profit jumped to 43.4 million euros from 11.9 million euros a year earlier. Puma said it will release full results for the quarter on July 26.

Kering Gains
Puma Chief Executive Officer 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 4.11 billion euros, while making an operating profit of 207.3 million euros, which would translate into a margin of about 5 percent.
Shares of luxury conglomerate Kering SA, which owns Gucci and 86 percent of Puma, rose as much as 1.4 percent 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.