Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the Q2 2026 Earnings Call of PUMA SE. Throughout today's recorded presentation, all participants will be in listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone. Please press the star key followed by zero for operator assistance.
I would now like to turn the conference over to Manuel Bösing, Director, Investor Relations. Please go ahead.
Thank you, Maura. Hello, everyone, and welcome to PUMA's second quarter 2026 earnings call. Joining me today are our CEO, Arthur Hoeld, and our CFO, Mark Langer. Before we begin, please take note of the cautionary statements regarding forward-looking information, which is included on the next slide of the presentation. We will begin with a short video and kindly ask you not to record it. After the video, Arthur will take over. Arthur and Mark will then lead you through today's presentation, covering our business recap, financial update, and way forward. Following the presentation, we will open the line for questions. To give as many participants as possible the opportunity to ask questions, we kindly ask you to limit your initial questions to two.
With that, please enjoy the video.
[Presentation]
Good afternoon, everyone. Before we start, allow me a quick personal remark after being the CEO of PUMA for just about a year. It's a great privilege to work with such an iconic brand. The energy from our teams and our people motivates us every day to drive our journey back to the podium, a journey that we called out and started last year. The key message from us are that the second quarter 2026 progressed in line with our commitments for the transition year as part of our three-year transformation journey. We see continued improvement in distribution quality and an ongoing transition of the brand and commercial operating model as our foundation for our future growth. Despite continuous macroeconomic and geopolitical uncertainties, we remain on track to achieve our plans for this year. Sales for the quarter were at -9.4% versus 2025. That's currency adjusted.
We look at the categories underneath that, we are very happy about the turnaround that is visible already in the categories of running and training. We do see a very positive brand impact, yet no significant commercial gain in football from the World Cup. We are undergoing a continuous transition in the categories of Sportstyle and Core. Above all, we're also seeing softer consumer sentiment, particularly in Europe. Our reported EBIT landed at -EUR 53.1 million in the second quarter. An incremental improvement of 51.3% versus last year. We have significantly lower one-time effects than 2025. Significant improvement is also our free cash flow, landing at EUR 328.8 million. That's primarily because of our improved working capital management and lower CapEx. Mark will talk in more detail through that one later on.
Looking back at the second quarter, of course, what stands out is our strong brand exposure during the World Cup on and off the pitch. In fact, 11 teams competing in the World Cup, the biggest stage since 2006 from a PUMA perspective. Two of our teams, Morocco and Switzerland, also made it into the quarterfinals. What was equally important for us was also our presence off the pitch and how we connected with consumers in social media. The announcement of Neymar, that he would join the Brazilian squad, for example, had more than 100 million online views, which was the highest viewed PUMA video ever on that channel. That was despite a very moderate media and production spend that we have put behind that one. Generally, we're very happy about the very balanced marketing approach that we have seen as a brand for the World Cup.
Overall, we clearly came out as a strong number three in unpaid online media mentions related to the tournament. Our commercial relevance, as discussed earlier already, we have not made significant impact in terms of our top line, however, very happy, extremely happy with the sell-out ratios of all of our national team jerseys. Led, of course, by the Portuguese jersey. From a product innovation perspective, both the Future 9 and the Ultra 6 have had very great exposure on the field of play and were involved in several key goals being scored. When you look at our second DNA category that we called out for our path back to growth, it is about running. Running is not just about our product innovation, it's also about the community-building, which are key pillars for acceleration in the future.
We've seen a very strong presence around the London Marathon, where PUMA, in the top 10% of the finishers, was the number four brand. Three of our athletes were in the top 10 across men's and women's. Our Project3, which is a community-based exercise that we start in 2025, has seen further heights. We had 200 runners participating in the London Marathon, and 60 of them finished within the top 100 of the men and top 100 of women. Great exposure for the brand at the highest level possible. We also used the London Marathon to exploit our NITRO Lab, which demonstrates the superiority of our footwear technology and had an amazing feedback and response again by thousands of consumers who were visiting the booth. NITRO is gaining overall momentum. It's the number two in global online searches compared to competitors' running technologies and franchises to date.
Both the Fast-R NITRO Elite 3 is doing extremely well in the elite races, and we are also very happy with the latest launch in the family, which is the Deviate Pure, that has very strong sell-out results recently. Moving on to training with our key partnership that is HYROX. We had amazing success rates with our key athletes. Joanna Wietrzyk, for example, set a new women's world record at just above 54 minutes. A few weeks ago, Simon Gronau, a German guy, finished 100 HYROX races within 100 consecutive days, sponsored by our apparel and our footwear. At the HYROX World Championships in Stockholm, we've been the number one brand in the elite 50 men and women's races. We had also a diverse amount of activations, not just on site, but also where we basically entertained runners and spectators with shakeout runs and activities around the Stockholm event.
What makes us extremely excited is the outlook for 2027, where the world championships will be happening in Hong Kong and drive further international relevance. Personally, I've been visiting also New York, the biggest event to date, with more than 50,000 athletes participating over 10 days. From a commercial perspective, certainly a highlight for us because we have a very strong sell-through of our products and franchises there. Definitely worth mentioning from a technology and from an innovations perspective, our first ever dedicated shoe for hybrid racing was awarded best sneaker of the year 2026 by Women's Health. Again, we're not just demonstrating leadership in the partnership with HYROX, we're also demonstrating leadership in terms of technology and advancement from a product innovation perspective. Where we are in transition is definitely our BU Sportstyle segment.
We're on the one side extremely pleased with the continued success of our Speedcat franchise, including the Ballerina and the Wedges. That is certainly also down to our marketplace management activities, our reset activities that we have established midway throughout 2025. The interest is not just high, it's growing across the globe. We see key success factors and key success moments in retailers across the globe. We also believe that the low-profile trend will continue into 2027, and other franchises like the H-Street will also help us to succeed there. In parallel, we're also starting the incubation of PUMA franchises, which are part of our iconic lineup, like the Suede incubation led by our PUMA ambassador, A$AP Rocky.
As we said last year, we are right in the middle of a three-year transformation program. Progress has been made not just in the 4D&A categories, but also in partnerships with McLaren, with Ferrari, and Aston Martin when it comes to Formula 1. It's a three-year transformation journey that will be continuously requiring our focus and our dedicated efforts. Transition will help us to build a very strong foundation for our brand for growth in 2027 and beyond. The objectives that we've outlined are pretty clearly outlined here. Next to our three-year journey that we're right in the middle of, it is again worthwhile mentioning that anything will depend on PUMA's return to brand momentum for future commercial success. All of our efforts are geared up to making PUMA a stronger brand again, and a strong that will connect with consumers worldwide.
We are driving higher quality revenue with an improved focus on profitability. That also means a continued effort on marketplace management as we started in 2025. We're elevating our financial discipline, and we will be delivering reliable results. Here I'm again very pleased to have Mark by my side as of this quarter. I'll talk a little bit later about how we also have evolved in terms of our team building around the world. On the next chart, you can see the right-sizing efforts in our organization that we have started at the beginning of 2025. The reduction of 20% of our workforce will be ended by 2026, at the end of 2026. We have already announced 500 positions at the beginning of the first half in 2025 as part of our Next Level Cost Efficiency program.
In addition, last year, we have identified another 900 positions. The reduction program will be closed by the end of this year. Our targets will have been achieved by then as planned. At this point in time, again, a big thank you to my PUMA team, to the organization who's been helping us and supporting us in executing the right sizing, but at the same time, focusing on building and rebuilding the business and our brand. We have also pointed out last year in 2025 that we're not happy with our distribution quality. We have shown you at the time that the left side of the graph here, that PUMA had an overexposure when it comes to the so-called mass merchant part of our distribution. What you see on the right-hand side is twofold.
A, we have, on an absolute level, reduced our exposure with those customers. B, we have also relegated them further down in the ranking. They're not anymore the top one and top two customers globally worldwide. That is part of our promise, in terms of cleaning up the distribution and giving PUMA a better chance to appear as a healthy and a prosperous brand in the future. Mass merchants will have a very limited role in PUMA's distribution like they do for any other competitor in the industry in the future. Overall, we are providing a very solid foundation for our organization to rebuild our brand. That means we are sharpening our brand identity. We are sharpening our positioning towards consumers in each and every market and each and every channel around the globe.
We have kicked off a significant investigation and reshaping on optimization of our overall marketing working budget. We're diligently investigating now where we are going to have fixed funds versus flexible funds in the future available in order to drive brand momentum and in order to drive the technologies and the icons and the product franchises we have identified as key for our success moving forward. Strengthening these key product franchises is of paramount importance for us as an organization.
Before I hand over to Mark, let me just briefly also touch on the senior leadership changes in our organization during the last quarter. On the commercial side of things, we have announced Bertrand Blanc as the Vice President for Global Wholesale and Dusan Hamlin as the new Vice President for Global E-commerce. That is now completing the channel lineup from a global perspective next to Ronald Reijmers , who was already appointed as the Global Head of Retail. We are also looking forward to Dennis Schroeder joining us as the Managing Director for Europe starting middle of August next month.
On the brand side of things, we have now also completed the senior lineup in Maria Valdes team. Laurent Fricker has taken over the role of Vice President BU Sportstyle, and Marcia Dos Santos is the Vice President of the BU Core. I'm extremely excited now that these people, these new leaders, are all on board, helping us to drive both brand and commercial success in the future.
Last but not least, of course, we have Mark Langer now on board with us, and I'm very pleased to hand over to him to explain you the financial details of Q2 2026.
Thank you, Arthur. Ladies and gentlemen, also warm welcome from my side. I'm pleased to take you now through the financial update for the second quarter. Following a solid first quarter, we saw a softer second quarter in line with our expectations. Sales declined by 9.4% on a currency-adjusted base, mainly driven by two factors. First, as indicated in our Q1 presentation, the impact from the reset measures initiated in the third quarter of 2025 was more pronounced in the second quarter than in the first. This included the reduction of undesirable business and lower promotional activity across both our full-price stores and e-commerce. Second, subdued consumer demand affected by the ongoing Middle East conflict, broader macroeconomic and geopolitical uncertainty, and continued inflationary pressure. Clearance continued to support sales in the second quarter, but had a substantially smaller impact than in Q1.
It could only partially offset the stronger impact from reset measures and weaker consumer demand. This year, the sales development reflects the ongoing impact of the measures we are taking, and we remain on track with our priorities during our transition year. Let us now take a closer look at the sales breakdown by sales channels. Wholesale declined by 14%, mainly driven by the reduction of undesirable business against Q2 2025, which still included a substantial mass merchant business. We saw softer underlying demand from Wholesale partners, especially in EMEA and the Americas. Direct-to-consumer sales increased by 0.4%, with e-commerce up 1.8%, supported by marketplace expansion in APAC and Greater China. Owned and operated retail stores declined slightly by 0.5% as clearance activities in our outlet stores only partially offset the impact of lower promotions and weaker consumer demand.
The direct-to-consumer share increased significantly from 32% in Q2 2025 to above 35% in Q2 2026. Let us now turn to our regional performance. EMEA sales declined by 12.9% currency adjusted, mainly reflecting a muted Wholesale performance from the reduction of undesirable business, subdued consumer demand, particularly in Europe, and lower sales in the Middle East due to the ongoing conflict. The Americas declined by 15.4% currency adjusted, with North America down 16.7%, mainly reflecting weaker consumer demand and the continued reduction of undesirable Wholesale business with mass merchants. Latin America declined by 13.8% due to softer consumer environment and a temporary operational challenge in Mexico, where we transitioned into a new warehouse and implemented a new ERP system. This affected delivery timings and sales, we expect part of the business to shift into subsequent quarters. Asia Pacific increased by 8.6% currency adjusted.
Once again. The best performing region in the quarter, with Greater China up 0.9%, supported by direct-to-consumer growth and the positive impact of the 618 shopping festival. This was partially offset by weaker Wholesale business, reflecting more cautious Wholesale partners following the announcement of ANTA's planned acquisition of a stake in PUMA. All other markets of the APAC region grew by 12.5% currency adjusted, driven by the low profile trend and strong direct-to-consumer performance in Southeast Asia. Looking at our performance by product division. Footwear sales declined by 11.7%, mainly reflecting weaker performance in core and kids. This was partially offset by continued momentum in low-profile styles. Running and training also delivered strong growth, supported by NITRO styles and the expansion of HYROX-related products. Apparel sales declined by 4.3%, mainly reflecting softer demand in core and kids again.
This was partially offset by growth in football, supported by the FIFA World Cup jersey sales. Accessory sales declined by 12%, reflecting broad-based decline across most categories. Let us now move on to the major developments in our operating performance. As discussed already, sales declined by 9.4% currency adjusted. On a reported basis, sales were down 9.7%, reflecting a limited FX impact of around 30 basis points, mainly from the U.S. dollar and the Indian rupee. Gross profit margin increased by around 180 basis points to 48.0%, and I will come back to the drivers in more detail on the next slide. Adjusted EBIT excluding one-time impacts came in at - EUR 41.9 million, mainly reflecting the significantly lower sales base, which more than offset the strong improvement in the gross profit margin. One-time effects amounted to EUR 11.2 million, significantly below the prior year level.
This was mainly related to personal and consulting expenses from the Cost Efficiency program. As a result, EBIT improved to - EUR 53.1 million compared to -EUR 109 million in the prior year, resulting in an EBIT margin of - 3.1%. Let me now come back to the gross profit margin drivers. Overall, gross profit margin increased by around 180 basis points to 48%. The increase was mainly driven by lower sourcing prices. This included tariff refunds effect of EUR 11.5 million, which contributed around 60 basis points to the overall margin improvement. A favorable channel mix reflecting a higher direct-to-consumer share, together with currency effects, also supported the margin development. These positive effects were partially offset by negative product mix effects.
Let us now take a closer look at operating expenses. Excluding one-time effects, OpEx decreased by 4% to EUR 872.6 million, mainly driven by benefits from our Cost Efficiency program and favorable currency movements. Marketing expenses remained broadly stable year-on-year. As OpEx decreased less than sales, the OpEx ratio, adjusted for one-time effects, increased from 48.6% to 51.6% in the second quarter. Moving on to working capital. Inventories decreased by 15.3% to EUR 1.8 billion, mainly reflecting lower purchasing volumes in line with the expected lower sales base for the year, as well as ongoing inventory clearance. Trade receivables declined by 18.9% to EUR 1.1 billion, mainly due to the lower sales level, while trade payables decreased by 20.8% to EUR 1.2 billion, reflecting lower purchasing volumes. Overall, these developments resulted in a 17% reduction in working capital to around EUR 1.5 billion.
Looking specifically at inventory development, inventory levels continued to decline sequentially in the second quarter, supported by lower purchasing volumes and clearance activities. We remain on track towards more normalized inventory levels by the end of fiscal year 2026. Let us now turn to free cash flow. Free cash flow was significantly stronger year-on-year and came in at EUR 329 million. This improvement was mainly driven by better working capital management, including lower purchasing volumes and inventory clearance, as I discussed previously, as well as improved profitability compared to last year. CapEx was also lower while investments remained focused on direct-to-consumer, particularly e-commerce and digital infrastructure. As communicated previously, we continue to expect free cash flow to be positive in 2026.
Finally, let me comment on net debt development. Net debt amounted to EUR 1.1 billion, slightly above the prior year level, but declined sequentially from Q1 2026, supported by the strong free cash flow generation in the quarter. Our cash position stood at EUR 373 million, up 27% year-on-year. In addition, we had unutilized credit lines of EUR 811 million, resulting in total financial headroom of EUR 1.2 billion. This gives us sufficient flexibility to support our transformation journey and strategic investments. At the same time, given the elevated level of net debt, we remain focused on our deleveraging path and aim to reduce net debt over the coming years. This concludes the financial part of today's presentation.
With that, I hand it back to you, Arthur.
Mark, thank you. Let me now conclude with the presentation on our way forward and specifically our outlook for 2026. We remain on track with our transition year. We do confirm our outlook for full year 2026. The outlook now includes our current assessment of the impact from the Middle East conflict and tariffs, which were not reflected previously. There are two key assumptions behind this assessment. First, we expect negative effects from the Middle East conflict on sales and profitability. Second, we expect positive effects from lower tariff rates and tariff refunds on profitability in the mid double-digit million euro range, resulting from the U.S. Supreme Court decision dated February 20, 2026. What does this mean for the outlook ranges? For currency-adjusted sales, we confirm our outlook for low single digits to mid single digit decline.
Within this range, we now expect a more challenging sales development as weaker consumer sentiment impacted by the Middle East conflict is affecting demand. Against this backdrop, we expect sales in the third quarter to continue to decline but sequentially improve from Q2. For the EBIT, we also confirm our outlook range of -EUR 50 million to -EUR 150 million. Based on our current assessment, the positive effects from lower tariffs and tariff refunds largely offset the negative effects from Middle East conflict. For Q3, we expect EBIT to sequentially improve from Q2. At the same time, further deterioration in consumer sentiment beyond our current assessment or additional tariff-related effects that may materialize in the future are not included in the outlook.
Let me conclude. We remain focused at PUMA to taking ourselves back to the podium. We will be a top three global sports brand in the future again. That is based on clear roles, clear identities of our categories, and a sharper brand profile, as outlined in the previous part of the presentation. Accelerating our brand momentum is the foundation for any commercial success in the future. We are very consciously, continuously undergoing our transition journey, and that's progressing well with important achievements that have been made and challenges that we are addressing proactively. Finally, our full-year 2026 outlook is confirmed. We do remain committed to achieve our plans as announced earlier. Thank you very much.
With that, I'm handing back to Manuel.
Thank you, Arthur. Thank you, Mark. We are now ready to start the Q&A session. Operator, please open the lines for questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. In the interest of time, please limit yourself to two questions only. One moment for the first question, please. The first question comes from the line of William Woods from Bernstein. Please go ahead.
Good afternoon. You said that your inventory clearance is on track. Would you be able to give a bit more of a sense of how much inventory you think is left with your wholesale partners, and how much you think is left in your own channels? What have you got to do over the next six months? The second question is on Asia ex-China. Why do you think you're growing so quickly in Asia ex-China? What's driving the success of the Speedcat in that market? Are there any learnings that you can take from how you're operating in China and apply them to how you're operating in Asia ex-China and what you can apply to Europe and North America? Thanks.
Thank you. I will start with the inventory question, then Arthur will comment on the APAC sales trend. To be very clear, we don't see any need to take back inventory from our wholesale partners. That was clearly something we did in 2025. There was a clear move to take back inventory from our partners, and we have been very well progressing with adjusted purchase order to clear this inventory, particularly via our factory outlet. Overall, I think we have completed, as you have seen on my previous chart on the absolute inventory level, our target to normalize inventory levels. In absolute terms, we are very close to our targets.
What we need now to achieve to take this fresh, revised inventory base to start accelerating our top line. We do not expect a return to growth in the current fiscal year. We think that the inventory level is now right and there's no further need from inventory clearance from takebacks from wholesalers.
With that, over to you, Arthur, on the Asia Pacific question.
Yeah, William, let me answer the situation in Southeast Asia and why I specifically think we are performing there better. To give credit to the teams, I think in Southeast Asia as well as Korea, the team has started much earlier to focus on a healthy brand and a healthy marketplace environment before we reset the entire company last year. That has affected in a cleaner brand proposition, in a cleaner positioning in the market, and it certainly helped the Speedcat to incubate much faster. It is also a natural thing that low-profile female silhouettes start earlier from a trend perspective in Southeast Asia before they then come across the rest of the globe. We also see now significant commercial impact of the low-profile business in Southeast Asia ahead of impact in Europe and in North America.
What we can learn from that is, of course, as I think we outlined last year already, a cleaner, a more stringent marketplace management, an integration of brand and commercial activities, and certainly a sharper focus on sellout ratios versus sell-in. That ultimately, I think, is the answer to your second question.
Excellent. Thank you very much, both.
Next question comes from the line of Anne-Laure Bismuth from HSBC. Please go ahead.
Yes. Hi, good afternoon. I have two question as well. The first one is about China. You mentioned that Wholesale business was weaker in China due to cautious order patterns following the announcement of ANTA acquisition. Can you give more details as to how much down the Wholesale business was? How should we think about China growth as a rule for the remainder of the year and also next year?
My second question is about gross profit development for the second half. What are the put and takes between discounting effects and tariff? Thank you.
Thank you, Anne-Laure. Let me start by reiterating what I think explained in our last call already. We're extremely happy about the arrival of ANTA as the future major shareholder. Transaction has not been concluded, therefore we're not in direct contact with them in order to reshape our business in China. We do, however, project, Wholesale customers are also seeing they want a more stringent development towards a DTC-led model, which is part of the ANTA success recipe in China. That has led some of our Wholesale partners to be more cautious in terms of store renovations and store build-outs versus the past.
We have not actively taken any measures to reduce that business. We remain committed to our partners and our previous commitments, but that is a tendency we now see developing over the year 2026. We're not concerned about that because, as I said, mid and long term, definitely, we believe in the strength of that future partnership, and we also believe in the significant opportunities that PUMA will have in China in the future.
With that, handing over to Mark for the second part of the question. Thank you.
Thanks, Arthur. Let me take the gross profit question. Overall, we expect the improvement versus last year that we've seen the first six months continue in the second half of the year. Clearly, we continue to benefit from a higher share of direct-to-consumer business. Carrying higher margin. We continue to see progress in our pricing discipline across all channels. We are continuing to benefit from lower purchasing volume.
The impact from exchanges might be smaller to more difficult to predict. I think overall, we do expect a positive impact. Do not forget that we have already received tariffs refunds also at the beginning of the third quarter. The tariffs refund will be another fourth supportive element. We will expect that gross profit margin in the second half, similar to the pattern we've seen the first six months, will be higher than what we have seen in the second half of 2025.
Thank you.
Next question comes from the line of Monique Pollard from Citi. Please go ahead.
Hello. Afternoon. Thank you for taking my questions. The first one was just if you could talk about the weaker demand for retail partners, particularly in the Americas. In this release, you talked about weaker demand from retail partners in both EMEA and Americas versus just talking about that being a problem in EMEA in the first quarter. I don't know if that is order books softening over the past quarter or what it is exactly. If you could talk to that would be helpful. Then could you help me also with an understanding of where you're seeing strong demand for low profile? Obviously, it's an APAC trend as you've highlighted, which Asian markets in particular, and are there any other pockets of strength that are emerging for low profile outside of APAC, please?
Thank you, Monique. Talking about the softer developments in North America, these are primarily down to our reset measures, which we've already indicated in 2025. We have significantly reduced, as outlined, the mass merchants business, which is part of our Wholesale business over there, and we have corrected purchase orders which were effective for spring/summer 2026 last already. That has led to a softer business, primarily in North America. We do see, however, also softer consumer sentiment as outlined in Europe, and that is one of the key drivers for our performance in the second quarter in 2026.
When it comes to low profile, yes, low profile is very, very significant for us in Asia, Southeast Asia, and other countries. Let's be clear, this is a trend that is now going across the globe, and we do see significant results and significant progress for us also in European and in North American customers. We have a couple of customers, key customers, where PUMA Footwear from a women's perspective is the fastest-growing brand at this point in time. We've been nominated Shoe of the Season or Footwear of the Season by several publications recently. You definitely see there's a global trend that will also prevail into 2027.
I'm pretty confident about that. Thank you.
Thank you. Sorry, can I just ask a follow-up? The few customers that you have where the female customers are seeing PUMA Footwear being the fastest-growing Footwear of the brands they have, where are those customers located?
To date, primarily in North America and in Southeast Asia.
Thank you.
Key customers in North America, high street customers that people are very familiar with.
Great. Thank you.
Thank you.
The next question comes from the line of Thierry Cota from Bank of America. Please go ahead.
Yes, good afternoon, gentlemen. Thank you for taking my questions. First on revenue growth next year. I think you've said in the past that you are targeting to grow above industry, that you are estimating at a low to mid-single digit pace next year. If you still do, which I would imagine, can you tell us what is the contribution you expect from current sales this year, as a proportion of sales to build questions about comparison base? Secondly, what reception from Wholesale accounts are you having for the products that you will launch next year, notably in terms of orders? Do you already have visibility?
My second question would be on the business model. What kind of revenue growth do you think you need to stabilize the ratio of OpEx to sales? Do you think it happened before you reach about a 40% revenue exposure to retail, which, if I'm not wrong, is one of the targets you have for the medium term. Thank you.
I think, Thierry, you have to reset your second question, but let me just first quickly take the first one. Clearly, we are not giving any specific guidance on 2027 beyond what we have stated previously. The elements to return to growth in 2027 remain unchanged. Based on building the momentum in our DNA category, by accelerating the positive momentum that we also shown you today in our D2C channels. Building on the momentum that we've seen with these DNA categories with our Wholesale partners, we believe, and we are convinced that 2027 will be the year of return to growth. We will not give further details on the growth patterns for 2027 at this time.
I think what we added [crosstalk].
May I have the second question?
Sorry, just to add to that one, to put it into perspective, we currently assume for 2027, based on the current market trend, that industry growth will be in the low to mid-single digit range. Just to give you the reference to our growth ambition also for the next year. Sorry, Thierry, if you could help us on restating your second question, otherwise we run the risk of saying something that was not specific to your question.
Right. Thank you, Mark. No, the question was, we've seen the ratio of OpEx to sales rising. We saw that in Q1, we saw that in Q2, we've seen that in the past. I was wondering what kind of revenue growth you think you need to stabilize that ratio. I was wondering, I think it has been said in the past that you are targeting to raise the exposure to retail sales and maybe to a target of around 40%, which will be close to a sort of industry standard. Do you think that this stabilization of ratio of OpEx to sales, which would be key for margin improvement, do you think could happen before and start before you reach about a 40% revenue exposure to retail?
Well, as we indicated already for the outlook for the second half of this year, we do see that this company is clearly not earning on our OpEx to sales ratio that we consider sustainable. To achieve that, and we will not give a specific target on OpEx to sales, but it is embedded in our return to structural profitability. It will require a return to growth on the top line, which gives you OpEx leverage. What I'm very confident to see that this company remains to be extremely focusing to have a tight management on its OpEx space.
We gave you some examples today, the investments we have done in our supply chain, a shift in the allocation and structure of our marketing budget, also the successful implementation of the headcount reduction that Arthur outlined today, which came to a conclusion in the second half of 2026, will allow us to achieve also OpEx leverage on managing our cost base going forward. I would ask for your understanding that we can't give you any specific OpEx leverage ratios for 2027 at this time.
Okay, great. Thank you, Mark.
The next question comes from the line of Jürgen Kolb from Kepler Cheuvreux. Please go ahead.
Yes, thank you very much. Two questions. First one on the running segment. Again, apparently strong growth. I was wondering if you could give us some more details. Is that because you're better with your existing partners, or are you seeing that you're adding new retail partners that are happy to buy your products in maybe even specialty stores? Maybe a quick comment on that one. I understand and I appreciate you're not going to give us too much details on 2027, but maybe some broad and high-level comments as to where you think you're going to see the growth specifically coming. Is that more lifestyle, Sportstyle? Is that more on the performance category? Is it more Apparel? Is it more Footwear?
What are the drivers that you see right now? I'm sure you have, obviously, the order book that tells you a little bit of a story, and I was wondering if you could maybe just high-level share a little bit of comments with us. Thank you very much, guys.
Thank you, Jürgen. The growth in running will be on both areas, as you said. On the one hand, we have decided last year to significantly ramp up our presence in running specialty, i.e., we have invested behind the so-called running and tech sales reps. That means we're penetrating much more the specialist stores versus what we have been doing in the past. That also now leads to a trickle-down effect into major sporting goods retailers where they see presence, where they see decent sell-out ratios of PUMA in specialist distribution, and that will now trickle down into the sporting goods area. That will also have the desired volume effect from us.
The key drivers in 2027 will be the ones I've outlined. I think we'll be seeing more growth from a footwear perspective based on the work the team has done in running, in training with the HYROX collaborations and all based on the NITRO propositions. We're very bullish on our footwear franchise, where we now also for the first time have introduced NITRO as a brand platform. From a lifestyle perspective, as I indicated, we do see an extended life cycle from a low-profile perspective going into next year as well.
At the same time, we're now rebuilding or incubating franchises like the Suede, also we're looking into opportunities from a classic running perspective for PUMA. The major growth drivers, as I said at the beginning, footwear, tech, innovation, three sports DNA category related.
Got it. Thanks very much.
Next question comes from the line of Warwick Okines from BNP Paribas. Please go ahead.
Good afternoon. I've got two questions as well, please. One on Wholesale and one on sales. On your Wholesale accounts, thanks for the updated chart about mass merchants. You've obviously made progress, but those red columns still represent third, fourth, and sixth in the rankings, though. Seems still quite high. Are you satisfied with that as being the endpoint, or how far down the chart will they move next year, do you think?
Secondly, could you just talk a little bit more about your sales outlook for the second half? You said low to mid-single digit for the full year, I think you said, but correct me if I'm wrong, that you're more likely to be towards the lower end of this, which I think implies a similar result overall to the first half. How should we think about the differences between Q3 and Q4? To state the obvious, they're extremely different bases of comparison from the prior year. Thank you.
Thank you, Warwick. I'll start with the first question. When you look at the positioning of the mass merchants in our top 10, we're very pleased with the progress we've made. That does not mean that is the end game. The end game is, of course, to further relegate them into the lower ranks or even out at the top 10 of our global customers. That will be achieved not by further reducing them only, but of course by growing in the other Wholesale partners around the globe. It's a containment strategy for mass merchants, but it's definitely a growth strategy, desired growth strategy in those more premium customers.
Thanks, Arthur. Warwick, let me take your question on Q3 and Q4 sales outlook. As we said, we do expect compared to Q2 2026 as a reference that we see in the Q3 a sequential improvement, but still a negative development for the quarter and a further improvement into the fourth quarter. Both quarters will benefit on our continued focus on D2C, but clearly also on comparison due to a smaller comparison base because these two quarters from last were significantly affected by the reset measures, which will be taken away and giving us a smaller base.
There is a sequential improvement quarter after quarter, which we expect first to happen the third quarter and a further improvement in the fourth quarter, which will add up to the full year guidance that we have current today, with a cautious statement that we have seen an update in our outlook that overall, we have seen a weaker consumer sentiment than we had seen at the point when we issued our full year guidance at the beginning of the year.
Got it. Thanks so much.
Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone. The next question comes from the line of Piral Dadhania from RBC. Please go ahead.
Thank you. Good afternoon. My first question is just on the overall marketplace and the pricing discipline. One of your peers yesterday was talking about a very promotional market from a lifestyle footwear perspective, which I think is quite visible to many of us. I was just wondering how that may affect your planned sell-in into the market as you think about a cleaner start to 2027. Does it change at all your relaunch plans and the discussions you're having with your retail partners? That was my first question.
My second question just relates to the product pipeline. I think you've kind of alluded to it, I was just wondering where you're seeing the most interest from a category and product perspective going into 2027. Is there any newness or innovation beyond the Suede that we can look at within the lifestyle part of your footwear business that we can anticipate as coming up into the pipeline at some point in the near future? Thank you.
Okay, Piral, let me take your questions. Yes, it is an appropriate observation that the market, specifically when it comes to lifestyle footwear, is quite promotional at this point in time. However, I would like to point out that with the strength of the low-profile business and specifically Speedcat, we are not as much affected by the promotionality of the market as such. It also is worthwhile mentioning that when you build up a new franchise, when you bring some newness to the market, the likelihood that you're as exposed to promotional activities by customers is smaller than when you have established franchises or mature franchises that are trending towards the end of their life cycle. I wouldn't say it's an easy one not to sell into customers, not at all.
Of course, it's a different position when you're selling new and fresh products that consumers haven't been as much exposed to previously versus ones that have been seen for three, four, or even five years. When it comes to interest in categories, yes, we do see the interest, of course, in our archival products, icons like the Suede. We're also now very cognizantly moving into exploiting opportunities when it comes to the running platforms, which also carry the NITRO proposition from a lifestyle perspective. There is interest in the market. There's definitely a movement in the market. We do see PUMA here as a fresh addition for consumers and customers' choice, ultimately. Thank you.
Thank you.
The next question comes from the line of Wendy Liu from JPMorgan. Please go ahead.
Hi. Good afternoon. Thank you for taking my questions. My first question is about your gross margin. I think last year in Q4, you booked, I think, 700 basis points in inventory reserve. I was wondering, by and large, how much of that can be reversed this year, and how much is this going to benefit your gross margin this year? More importantly, as you think about 2027, what should we think of as a baseline for your gross margin? I know it's a bit early to ask, but I was wondering if there's a baseline that we should model gross margin for.
Second question is just a very quick one. I think you could give us the split between the growth for Europe and rest of EMEA. I was wondering if you can share a bit of more details about this. I don't see this in the presentation. Thank you.
Wendy, let me first take the gross profit question. From my perspective, looking at the gross profit development in the second quarter 2026, that's, for me, a clean development. When we talked about that we expect gross profit margin development going forward for the remainder of the year, this implicitly meant that the improvement measures that we described and outlined to you today for the second quarter, we expect these factors also to be relevant for the remainder of the year. Let me just quickly re-tell them. We continue to benefit from a higher direct-to-consumer share. We continue to benefit from tariff refunds, and we continue to benefit from lower sourcing factors.
I think it makes more sense, from my perspective, to extrapolate current gross margin trends than base it on a delta calculation versus last year. Last year, as I understand, and I've read through the reports, were affected by some extraordinary effects. I would rather recommend you to look into an extrapolation of current year trends than base your analysis on a delta calculation versus last year. As we move into 2027, I will repeat my statement earlier, we will not give any quantitative guidance for 2027 if it's related to sales, profit or margin.
Overall, I see no reasons that we will continue to benefit from a continued growth, both from a direct-to-consumer share also into 2027. Please understand that we, at this point in time, will refrain from giving any gross profit margin beyond the current fiscal year. Could you just quickly restate your second question? I wasn't sure whether I picked it up completely.
Yeah, sorry. I just wanted to see if you can give any color with respect to the growth of Europe versus the rest of EMEA.
Okay. Sorry. Clearly in the more mature markets of Western Europe, we've seen a more muted growth. The growth, if you split it into the Middle East, African markets, was also negative, but it was pronouncedly better than the development we've seen in Western Europe.
Perfect. Thank you so much.
You're welcome.
There are no further questions at this time. I head back to Manuel Bösing for closing comments.
Thank you, Maura. Thank you all for your time, your questions, and your continued interest in PUMA. We appreciate your participation today and look forward to speaking with you again soon. This concludes our second quarter 2026 earnings call. Thank you, and have a great weekend.
Ladies and gentlemen, the conference is now over, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.