Sporting goods rivals: Adidas is doing badly - Puma not so

The Corona crisis is turning the world upside down among the Franconian sporting goods giants.

While Europe's industry leader Adidas has to withdraw its growth targets due to weak business in China, its competitor Puma is making up ground.

After record sales of more than 2 billion euros for the first time in the second quarter, its CEO Björn Gulden raised the forecast for the current year.

Puma now wants to grow by around 15 percent this year - previously an increase of around 10 percent had been targeted.

The sticking point is the China business – once not only the fastest growing but also the most profitable market.

Customers in the People's Republic are considered to be heavily focused on branded goods.

The large stores of Adidas and Puma, but also those of the American competitor Nike, were booming.

But the government in Beijing is pursuing a rigorous zero-Covid strategy and almost completely freezes public life in affected regions if there are new corona cases.

The ever new lockdowns mean that the shops are closed.

Adidas suffers more than Puma, mainly because the China business was more important for the second largest sporting goods manufacturer in the world.

Sales in China are not recovering

Adidas therefore had to significantly scale back its expectations for the current year.

The group announced on Tuesday evening at its headquarters in Herzogenaurach that profit from continuing operations will fall by 13 percent to around 1.3 billion euros instead of rising to around 1.8 billion as previously planned.

Last year, the company had made almost 1.5 billion euros in profit.

CEO Kasper Rorsted dropped his previous forecast because he had given up hope that business in China would recover in the second half of the year.

Sales there - around a fifth of Adidas' entire business last year - will instead shrink by more than 10 percent due to the ever new lockdowns.

That translates to world sales growing by just 5 to 9 percent instead of the previously expected 11 to 13 percent.

Another burden in China is that calls for a boycott of Western companies are circulating on local social media after governments in Europe and America criticized the conditions of the Uyghurs in Xinjiang province.

risks remain

Adidas shares, which had already given way to the announcement in late trading on Tuesday evening, slipped further on Wednesday.

At times there was a minus of almost 6 percent to around 160 euros.

The Puma shares, on the other hand, were up 1 percent on Wednesday afternoon to a good 67 euros.

Before that, they too had slipped.

This should have something to do with the fact that Puma's CEO Björn Gulden sees a number of risks despite the confident sales forecast: inflation, geopolitical tensions, a falling consumer mood.

He therefore left the profit forecast untouched.

However, analysts encouraged Puma: the brand dynamics are stronger than the drop in demand from China, said James Grzinic from the investment house Jefferies.

Volker Bosse from Baader Bank praised the second quarter, but noted that Puma, like the entire consumer goods sector, is suffering from recession worries and that the supply chains are still disrupted.