JD Sports, Adidas and to a lesser extent Puma are ideally placed to recover market share in China and, with Nike, dominate other areas of Asia Pacific, according to Citi.
While the US remains the largest sportswear market globally, Asia-Pacific represents the largest growth opportunity, says the bank.
“In China, we believe international brands can start to regain share from domestic brands in 2024, supporting growth despite the weaker macro background.
“We expect Adidas to start turning around its Chinese market share from 2024.
“Puma’s focus is on repositioning its US product to achieve more full-price sales, and improving its Chinese market share.“
This will be a challenge given Nike and Adidas’ larger marketing budgets, their refocus on wholesale and Puma’s more marginal position in performance sports, said the bank.
For JD Sports, there is a significant opportunity to deploy capital, generating returns above its capital cost, with cash generation supported by working capital control.
Buy JD Sports and Adidas is Citi’s, with a neutral rating on Puma.