Nike shares collapse after disappointing figures – Adidas and Puma benefit

During the corona pandemic, sporting goods manufacturers were still doing good business, but things have been more difficult since then. The world's largest sporting goods manufacturer Nike presented disappointing figures yesterday after the US stock market closed.

Sales fell four percent year-on-year to $11.2 billion in the last quarter. Profit fell by two percent to $712 million. For the fiscal year, Nike expects a decline in sales in the high single-digit percentage range. The receipt came promptly: in premarket trading on Wall Street, the sporting goods giant's stock temporarily lost over ten percent. The fact that management announced a restructuring program that would save around $2.5 billion in the coming years apparently did not reconcile investors.

German manufacturers asked

It is interesting that the shares of competitors such as Adidas and Puma were only pulled down for a short time in view of the problems at Nike. After an initial loss, the shares of Adidas in the DAX and Puma in the MDAX turned significantly positive in the morning - up to around two percent.

The reason is that experts believe Nike's weakness is largely homemade. Many consider it a mistake that the market leader has relied heavily on sales through its own sales channels in recent years at the expense of retailers. The strategy didn't work. Particularly in the US market, competing brands - such as Adidas - took over shelf space in stores from Nike.

Business in China is not uniform

Nike also has big problems in the important and huge Chinese market. According to experts, this is also due to a lack of market-specific innovations. Sales have recently fallen by almost a quarter.

Things are different at Adidas. The Germans are increasingly able to score points in the difficult market. Instead of bringing global designs to China, products and their designs are increasingly being developed locally. This is intended to serve the Guochao trend, which is intended to express pride in one's own Chinese culture.

At Shanghai Fashion Week last year, Adidas showed over 100 looks that were created in collaboration with young Chinese designers.

Adidas and Puma with positive prospects

Thanks to strategies like this, the German sporting goods manufacturer has recently presented very good figures. In the second quarter of this year there was record net sales of 6.7 billion euros. Operating profit climbed by five percent to 574 million euros. The outlook is positive.

Analysts believe Adidas can benefit from rival Nike's current weakness and gain market share. For Puma, Nike's crisis could also bring additional market share, say experts. However, the group is undergoing restructuring and is posting operating losses.

At the presentation of the balance sheet for the second quarter, Puma CEO Arthur Höld ​​said: "After a solid first quarter and an expectedly weaker second quarter, we expect a gradual improvement in sales in the second half of this year. This makes us confident about the further development of the year as a whole and we confirm our outlook."

Market environment is difficult

But it is also clear that the sporting goods business has become more difficult for established brands. The industry is currently struggling with, among other things, the fact that many customers no longer have the money they need due to rising inflation. Tariffs and trade barriers are an additional burden.

In addition, the number of competitors has increased, which is costing traditional brands such as Nike, Adidas and Puma market share. Their shares have lost some of their value significantly in recent years.

DAX clearly in plus

Falling energy prices and a certain stabilization of bond yields encouraged DAX investors at the end of the week: the leading German index managed to rise above the psychologically important mark of 25,000 points again and was able to more than make up for its losses from yesterday.

Investors are eagerly awaiting the US labor market data in the afternoon. It is hoped that they will provide new information on the US Federal Reserve's monetary policy. A weak jobs report could ease the pressure on the DAX as it would dampen acute interest rate hike concerns, said Frank Sohlleder, analyst at ActivTrades: "A strong labor market report, on the other hand, threatens to drastically accelerate the current downward trend."