Adidas, Puma shares slip after Nike results lead to caution

By Louis Goss

Shares in Europe's top sportswear companies fell on Friday following a mixed set of results from Nike.

Nike, the world's largest athletic apparel seller, on Thursday said a combination of flat sales and higher costs had seen its fiscal third-quarter net income fall 5%.

Shares in Europe's top sportswear companies fell after the Nike's (NKE) results. Puma (XE:PUM) shares fell 2%, having lost 23% of their value in the year-to-date. Adidas (XE:ADS) shares fell 1%, after gaining gained 7% in 2024 so far. JD Sports (UK:JD) shares fell 3%, having fallen 30% in 2024 to date.

Nike's underwhelming results, in turn, overshadowed any positive impact from news it will replace Adidas as the official supplier to Germany's national football team in 2027, in what is set to mark the end of the German company's decades-long partnership.

Nike, based in Oregon, said it now plans to invest in marketing, in order to "grow the marketplace" and also improve the way its products are displayed in stores owned by its wholesale customers, including Foot Locker.

Analysts said Nike's mixed results could signal growing headwinds for Europe's major sportswear companies, while also creating an opportunity for those companies to capture part of Nike's market share.

Citi analysts said Nike's cautious approach to product management, in line with its plans to focus on newness and innovation, could create a "near term opportunity" for close rivals such as Adidas and Puma, while also hitting retailers like JD Sports.

The analysts at Citi pointed to surveys showing Adidas is gaining ground on Nike across North America, China and Europe, in terms of consumers' perception of top sportswear brands.

Yet Jeffries analysts, led by James Grzinic, said that while Nike's flat sales could have been taken as a positive for its European rivals, the U.S. giant's push to increase its marketing spend by 10%, to $1 billion, would likely counter any benefits to companies like Puma or Adidas.

Peel Hunt analysts led by Jonathan Pritchard said Nike's statements saw it become "the latest in a string of sports retailers that have been cautious about the outlook in the early part of FY25," as they suggested European rivals could post similar forecasts.

The analysts said they now expect JD Sports will also "allude to a tricky few months in its update next week" and said it expects the U.K. company's FY25 performance will likely "reflect that predicted by others," including Nike.

-Louis Goss

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03-22-24 0644ET

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