(Update: Revised with additional commentary and background.)
FRANKFURT (dpa-AFX Broker) - Shares in Adidas and Puma defied a disappointing outlook from US rival Nike on Wednesday. While Nike stock plummeted 10.5 percent to 47.25 US dollars in US pre-market trading, shares of the two German sportswear manufacturers recovered amid a robust broader market.
On the Dax, Adidas shares rose by a below-average 0.6 percent to 137.45 euros following two days of gains, while the German benchmark index climbed 2.0 percent. Puma, by contrast, surged an above-average 4.5 percent to 22.69 euros. The mid-cap MDax index gained 2.5 percent simultaneously.
In addition to general investor optimism regarding a potential end to the Iran conflict, Adidas was primarily bolstered by a pre-earnings event that was well-received by analysts ahead of the April 29 quarterly results, according to one trader. "This demonstrates that Nike is facing internal issues; consequently, a cross-read to industry peers, particularly Adidas but also Puma, remains invalid." On the contrary, reports suggest that Nike's weakness is contributing to the strength of its competitors.
The previous day, Jefferies analyst James Grzinic commented positively on the Adidas pre-close call. He noted that the event confirmed a continued positive balance between the maturity of the "Terrace" sneaker segment and robust demand for apparel and running gear. Furthermore, according to Grzinic, initial impressions of the new Hyperboost running shoe models are "promising."
Analyst Jürgen Kolb of Kepler Cheuvreux also wrote favorably on Adidas. While the German company reaffirmed its full-year targets, expecting stronger revenue growth in the first half of the year than in the second, Nike appears to require more time overall.
Although the US corporation exceeded expectations in its most recent fiscal quarter, the absolute performance regarding revenue decline and operating margins indicates that the Americans are in the midst of a repositioning process. Ultimately, it became clear that a return to growth will not occur sooner than anticipated. This, in turn, "continues to offer Adidas the opportunity to strengthen its own market position, as the company has expanded its product range and benefits from a strong brand image." Nike had beaten expectations in the third fiscal quarter, but its outlook disappointed the market.
Regarding the more pronounced rise in Puma shares today, equity expert Andreas Lipkow of broker CMC Markets suggested that, beyond the generally positive market sentiment, renewed takeover speculation might be at play. In late January, the Chinese group Anta Sports Products announced its intention to take a significant stake. As the parent company of brands such as Atomic, Fila, Jack Wolfskin, Salomon, and Wilson reported approximately two months ago, it intended to acquire a stake of just over 29 percent from the French billionaire Pinault family, subject to regulatory approval./ck/jsl/men
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