Puma Q3 profit beats expectations as European demand for its sneakers remains strong

Not everybody is deterred by a challenge—at least not Puma. Despite taking an initial Q3 earnings hit on the strength of the euro, the brand beat expectations with a quarterly operating profit of 236 million euros ($252 million), the company reported on Tuesday.

Puma also mentioned a strong demand for its sneakers and apparel last quarter across Europe despite a slowdown in the US, and maintained its full-year outlook.

Investors breathed a sigh of relief; analysts had previously predicted Puma would fare below expectations. “Ahead of the results there was a lot of caution especially on the top line and on margin, but things were a bit better than expected,” DNCA portfolio manager Damien Lanternier told Reuters.

The brand said it anticipated “‘strong improvement in profitability’ in the fourth quarter helped by lower marketing, sourcing and freight costs, despite a gloomy backdrop for consumer demand,” according to Reuters.

“We stay, let’s say, very conservative and very cautious because we just see too many moving parts currently in the world,” CEO Arne Freundt said during a call with reporters.

Puma isn’t the only apparel brand dealing with flagging consumer demand in the US. Earlier this year, Burberry and LVMH reported a slump in sales, attributing it to a dampening US market. Meanwhile, regions including China and Europe have performed much better.

Capri Holdings—the parent company of Jimmy Choo, Michael Kors, and Versace—also recorded declining sales this year, Retail Brew previously reported. “We definitely saw a sequential decline in North America,” John Idol, Capri Holdings chairman and CEO, told analysts in a fiscal Q4 earnings call in June. “We saw it first in the North American department stores, and it wasn’t just the Michael Kors piece of the business. We saw it on the luxury side as well, with Versace and Jimmy Choo.”