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Puma Aims to Be the Fastest
Puma has launched a marketing campaign with the slogan "Forever Faster", focusing on the upcoming Olympic Games in Paris. With this event, the company hopes to achieve a surge in sales of the leading products such as running shoes or kicks and is using its partnership with Jamaican sprint champions to compete with rivals on the market. Lately, sportswear brands have faced challenges as consumers spend less money on expensive products due to high inflation and poor economic conditions. In the last quarter of 2023, Puma's sales fell sharply year-on-year as well as compared to the previous quarter. In late February, the company warned that it expects a weaker first half of 2024 and announced plans to increase dividend payments to its shareholders, aiming to return up to 50% of its net profit, as part of its share buyback initiative. The program, which began in March, will continue until May 6, 2025 and during that period, Puma intends to repurchase and subsequently eliminate €100 million ($108 million) worth of shares. Due to lower sales, even the shares of this brand lag behind the competition.*
Source: Investing.com*
Nike Mainly Represents the USA
Nike also hopes to boost its sales with famous athletes’ partnerships at the upcoming Olympics. The company will provide jerseys and full kit for all the U.S. athletes, as well as for participants from many other countries such as China, France, Japan, Uganda and Kenya. In addition, the sneakers that Nike will present at the Olympics are targeted at a relatively narrow group of consumers, but with the aim of helping to sell a wider range of running shoes. The company recently warned investors of expected lower sales in the first half of fiscal 2025 (the period from June 1, 2024, to Nov. 30, 2024) as it plans to limit availability of the certain already-launched sneakers to focus on new product development. Analysts at HSBC predict that Nike's revenue growth will be slower in the coming years compared to rival Adidas’[1], despite significantly outpacing its competitors with revenues of over $51 billion for fiscal 2023 (period ending May 31, 2023). * Wedbush's analyst Tom Nikic thinks that while brand presence at the Olympics is important to attract customers, ultimately the appeal of the products will be the deciding factor.
Source: Investing.com*
Adidas Bets on Non-traditional Olympic Sports
Although Adidas' primary focus at the Olympics remains athletics, this year it is betting on sports that are relatively new to the Olympics, such as climbing, skateboarding and BMX, as well as this year's complete novelty, breakdancing. This company, like its rivals, has its own hurdles to overcome, the biggest of which is the termination of its collaboration with rapper Ye in 2022 and the subsequent withdrawal of his sneakers from sale, which caused Adidas to be in the red at the end of 2023 for the first time in three decades.* Another below-the-belt blow was the announcement of the end of its partnership with Germany's national football team after 70 years, which will be sponsored by Nike from 2027. CEO Bjorn Gulden, who took over management of the company early last year, emphasised the new strategy of relying on sport rather than just big names and influencers. After the Paris Olympics, it remains to be seen whether the plan is working. For Adidas, the goal is to regain market share it has lost to its competitors over the past few years. It is the focus on sports that are closely linked to hip-hop and street culture that presents an opportunity to win a wider range of customers in important markets such as China. Although Adidas' presence at the Paris Olympics will not be as large as it would like, the sponsorship deals will be in place for years to come.
Source: Investing.com*
Since the beginning of the year, Adidas share prices have risen by more than 8% as of April 12, while Puma and Nike have seen considerable losses. * Despite market being plagued by low sales, Puma, Nike and Adidas continue to come up with new strategies putting their focus on specific targets. The Olympics have always been a major setting of fierce battles for championship, not only between athletes but also brands and their products, through their partnerships with winners.
David Matulay, InvestingFox
* Data relating to the past are not a guarantee of future returns.
[1] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. Forward-looking statements inherently involve risk and uncertainty because they relate to future events and circumstances that cannot be predicted and actual developments and results may differ materially from those expressed or implied in any forward-looking statements.
Warning! This marketing material is not and must not be understood as investment advice. Data relating to the past are not a guarantee of future returns. Investing in foreign currency may affect returns due to fluctuations. All securities transactions can lead to both profits and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.
Sources:
https://www.investing.com/news/stock-market-news/puma-expects-weaker-first-half-in-2024-3316083
https://uk.style.yahoo.com/finance/news/adidas-warns-2024-sales-decline-063404928.html
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