Puma highlights ‘volatile’ demand after rise in second-quarter sales

German sportswear retailer Puma’s second-quarter sales grew by 11%, the company reported on Wednesday, slightly ahead of market expectations thanks to stronger revenues from Asia and Europe, while the U.S. dragged on performance.

The sportswear sector is struggling to bring down inventory levels in the face of weakening demand in North America and a slower than expected recovery in China, a market the industry was betting on to boost sales.

Puma’s shares were up 3% by 0755 GMT, buoyed by the stronger sales.

Puma said it was on track to meet targets for 2023 but sounded a cautious note on market conditions, including an “uncertain” recovery in China and weak consumer sentiment in the U.S..

“The U.S. is a market which continues to be soft,” CEO Arne Freundt told reporters on a call.

Puma’s sales in the Americas were down 4.4% from the same quarter last year – a worsening after a 0.8% decline in the first quarter, which Puma blamed on its “relative dependency” on off-price wholesale business.

Globally, Puma said it achieved its goal of normalising inventory levels by mid-year, with inventories at 2.146 billion euros, down from the first quarter.

Freundt said Puma would focus on ‘elevating’ its brand, as the retailer said it saw strong demand for its new terrace sneakers Palermo and Super Team.

The first products from a renewed partnership with Rihanna will showcase the Grammy-winning Barbadian singer’s take on the terrace trend, Puma said, when they launch in September.

Puma’s sales came in at 2.12 billion euros ($2.34 billion) in the quarter, up from 2 billion a year earlier and above the 2.05 billion expected by analysts polled by Refinitiv Eikon.

The company confirmed its full-year outlook of high single-digit currency-adjusted revenue growth, and an operating profit of between 590 million and 670 million euros. It flagged a possible adjustment to guidance if things go well in the third quarter.

($1 = 0.9043 euros)