Full year guidance upside after Q2 sales beat The key takeaway from Puma''s Q2 results was that management said it is ''perfectly on track'' to meet full year guidance. It noted that Q3 had started favourably and that it could adjust its full year outlook in due course. We think this is more of a sales comment, given gross margin pressure in the quarter, rather than a profit comment, but our EPS forecasts edge upwards. We do think, however, that the overall sporting goods environment is now broadly past some of its supply challenges, and the focus should be on brand heat, macro and gross margin recovery. Adidas is our preferred play among the brands, as set out in ADIDAS (+) / INDITEX (=) : From Z to A. Q2 summary - sales beat was the main surprise The punchline from Q2 was that the year is on track, with Q2 registering stronger sales than expected, including a small 100-200bps pull-forward from Q3 shipments. Q2 EBIT beat and EPS missed slightly. North America remains the weak spot and we estimate the growth in China only slightly improved compared with Q1 when compared with 2019 levels. EEMEA, notably Turkey, Ukraine and Middle East, drove over-proportionate growth. H2 outlook - uncertain outlook but a good start to Q3 Management has not changed its guidance, but comments about July trading suggest that Q3 has started ahead of its low/mid-single-digit guidance. The gross margin trajectory improves in H2, as it should for other players in the industry, thanks to lower promotions and lower sourcing costs, although currency will probably remain a headwind into next year. Forecasts broadly unchanged We bank the Q2 EBIT beat but our FY23 EPS forecasts only edge upwards. We remain below consensus for 2024, which looks for c.27% EBIT and c.33% EPS growth. Our price target ticks up to EUR 64, based on long term margins of c.10%, but we prefer Adidas (+) and JD Sports (+) in the sports sector.