Nike’s latest results have positive implications for Adidas and Puma, but raise concerns for JD Sports Fashion PLC (LSE:JD.), according to analysts.
The US sportswear giant's fiscal first-quarter numbers contained a cautious tone, analysts at Citigroup and UBS felt, and included a withdrawal of full-year guidance and underperformance in the first quarter, where a decline in China and North American wholesale channels weighed on results.
"Nike, once again, stressed that fiscal 2025 will be a transition year, but the tone on potential market share gains was incrementally cautious, in our view which bodes well for Adidas," said UBS.
Both UBS and Citigroup see potential opportunities for Adidas amid Nike’s struggles, but raised concerns for JD Sports due to Nike’s declining key franchises.
However, JD Sports’ exposure to Nike has decreased, it was noted by UBS, and it may still see a profit upgrade due to strategic moves like the acquisition of Hibbett.
Citi highlighted three key points: Nike’s focus on managing product lifecycles, notably with sales declines in key franchises like Air Force 1 and Air Jordan 1, which could be a headwind through FY25.
Nike seeing an improving momentum in running with providing some confidence for Citi, who see the US group's weakness in lifestyle in the near-term as "providing opportunities" for Adidas and Puma but risks for JD Sports, "but its refocus on sports performance and running as a potential headwind medium-term for the European brands".