The Wild Cat keeps on running faster than its two biggest rivals. After growing by 15.3 percent in the first quarter of 2019, its sales leaped forward by 15.7 percent in local currencies during the second quarter, reaching a level of €1,227 million for the period. The growth was broad-based, but the Sportstyle, Motorsport and Golf categories showed the highest growth rates.

The gross margin improved by 0.8 percentage points to 49.3 percent, thanks to a more positive channel and product mix, lower discounts and positive currency impacts. The operating profit rose at a faster rate of 39.4 percent, representing an Ebit margin of 6.5 percent, and the net profit jumped by 59.7 percent to €49.7 million, sending the share price up by more than 6 percent.

Sales in Europe, the Middle East and Africa (EMEA) picked up speed, rising at a currency-neutral rate of 8.4 percent. While the British market remained sluggish, Germany recorded an improvement and France was “okay,” according to Puma's chief executive, Björn Gulden. Retro running styles, chunky sneakers and many other new products fueled the growth. The recent launch of Puma's new Manchester City jerseys was very successful, and it should help keep the momentum in the next quarters.

On the other hand, the Americas passed Europe as the largest region for the company during the second quarter, recording a 22.7 percent increase to €462.8 million, although the rise in local currencies was limited to 19.7 percent. Appealing mainly to male teenagers, Puma's new classic basketball shoes were well received upon their launch in the U.S., opening up more shelf space for the brand in the U.S. market. Sales picked up in Brazil as well.

Asia-Pacific remained the fastest-growing region, with a currency-adjusted rise of 21.6 percent. An increase of about 50 percent in China was partly offset by tougher market conditions for the brand in Japan as well as in Korea, where Puma is gaining traction in the lifestyle segment. Two-thirds of the turnover in China is being generated by the brand's two wholesale partners, which are opening about 100 doors per year. While working also with the big local online marketplaces, Puma is adding 70 of its own stores in China, closing smaller ones in favor of bigger ones.

In general, Puma is tilting toward to a more balanced situation among the three main regions of the world as well as a better balance between footwear and apparel, whose sales went up in the latest quarter by 14.5 percent and by 22.7 percent, respectively, in terms of constant currencies.

Similarly, Puma's management is looking for the right balance between the wholesale and retail channels, including its own full-price stores and outlets, e-commerce and online marketplaces. While following the consumers' shopping habits, it wants to remain a good partner of its wholesale clients. On the other hand, sharing inventories with retailers is leading to higher selling costs.

Thanks in part to higher comparable sales, the company's own retail sales went up by 21.5 percent in local currencies in the latest quarter, representing 23.6 percent of total revenues. The brand continued to invest heavily in its own online business, which grew strongly but remained at a level of between 5.0 and 5.5 percent of sales.

The company's inventories went up by 19.4 percent in the quarter, with up to 7 percent of the volume due to higher forward orders in the expectation of stronger competition among the major sports brands for the available capacities in a rapidly changing sourcing environment. Like them, Puma is continuing to move increasing volumes away from China, but its new partners in countries like Vietnam, Bangladesh and Cambodia are asking it to book capacities one or two months earlier to do business with them at reasonable conditions.

Its prices in the U.S. have remained stable. In view of possible new import duties from China, which would inevitably lead to price increases, Puma is now ordering only about 25 percent of its requirement for the U.S. market from there, compared with more than 50 percent five years ago. As indicated before, it is now manufacturing more apparel in China for the local market, trying to apply the same strategy to footwear.

The good results booked in the first half have led the management to cautiously raise its sales outlook for the full financial year to an increase of 13 percent, compared with a previous forecast of 10 percent. This would imply that the growth in second half could be softer than in the first half, but this will largely depend on reorders and retail sales in the fourth quarter.

The gross margin is still predicted to improve slightly from last year's rate of 48.4 percent. Net earnings will rise significantly as the current forecast for the operating profit is a range of €410 million to €430 million, up from a previous spread of €395-415 million.