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The sportswear industry is struggling with weakening demand in North America and a slower than expected recovery in China, where Nike (NYSE:NKE), Adidas (OTC:ADDYY) and Puma are facing increasing competition from local brands.
Analysts at brokerage Stifel said Puma’s third-quarter earnings before interest and tax might decline by a low double-digit rate compared with last year, a worse performance than consensus expectations for a 6% decline.
The drop in Puma’s shares put them on course for their worst day since March 2020.
Puma said it was fully on track to achieve its full-year guidance, while declining to comment on its share price movement.
Puma is targeting EBIT of between 590 million euros and 670 million euros for 2023, from 641 million euros in 2022.
RBC analysts said the top end of Puma’s full-year 2023 guidance may be out of reach, and the likelihood of a guidance raise for the full year had diminished.
Puma is set to report its third-quarter results on October 24, and rival Adidas on November 8.
Adidas shares fell by about 2.7%.
Analysts see potential for a fourth-quarter bounce even if the third quarter disappoints.
“We expect Puma to reconfirm a view that Q4 organic growth should reaccelerate once more, as the worst of the U.S. overstock hit starts unwinding,” analysts at Jefferies said.
High inventory levels in the U.S., a hangover from supply chain issues during the pandemic, have weighed on apparel retailers’ performance in that market.
Stifel analysts also said they expected Puma to show an improvement in inventory levels, and that the fourth quarter would be a “turning point” for the company.
