Full year guidance trimmed after Q2 miss Puma shares fell sharply today on the back of disappointing Q2 results and full year guidance being trimmed. It threw into sharp relief the positive momentum over at rival Adidas (+). Puma''s product pipeline should build towards the end of the year but in the short term we see no rush for investors to revisit the stock, particularly with Q3 profits guided down-to-flattish. Adidas is our preferred play among the brands, as set out in Stripes vs Swoosh. Q2 summary - the market had expected more The punchline from Q2 was that investors were expecting a sales beat, and it did not materialise. Constant currency growth of +2.1% was below already-lowered sell-side expectations, and we think that investors expected a beat. Adidas was +16% year-on-year excluding Yeezy in the same quarter. Puma''s Q2 EBIT was c.2% below consensus, and higher financial charges meant that Q2 EPS missed by over 20% (see Figure 4). H2 outlook - an unexpected trim to guidance Management reiterated its full year sales guidance but narrowed its profit guidance, with the mid-point falling c.2.3% (see Figure 6). It said that profits in Q3 would be down-to-flattish year-on-year, before more than 40% growth in profits in Q4, helped by the reversal of last year''s Argentina peso devaluation. The company attributed this to external factors such as freight surcharges, increased duties in Mexico and muted consumer demand in China. Forecasts cut c.8%, price target lowered to EUR 42 Puma shares fell c.11% today. As well as banking the Q2 miss we trim our H2 expectations, with our full year EBIT falling to EUR 656m from EUR 685m. Hence, we sit towards the top end of the new guidance range. We cut our DCF-derived price target to EUR 42 and continue to prefer Adidas (+) and JD Sports (+) in the sports sector. See inside for 15 questions for management.