Adidas

Nike reported a slightly better than expected Q3, but issued a weak outlook for Q4 (March to May). The company expects Q4 sales to decline 2% to 4% YoY, with a similar decline anticipated for the full year, while earnings are expected to remain broadly flat.

In China, following a 7% decline in Q3, Nike expects sales to drop by around 20% in Q4, reflecting ongoing distribution clean-up, particularly in the Lifestyle segment. This is compounded by disruptions in Europe and the Middle East.

The softer outlook highlights continued opportunities for Adidas and PUMA. As Nike restructures its Lifestyle segment, Adidas has gained meaningful market share, driven by the success of its Terrace franchise, including Samba, Gazelle and Spezial. In addition, Nike appears to be lagging in product innovation within Running.

Overall, it remains too early to call a turnaround at Nike, while the current environment continues to favour Adidas.

Expert Opinion:
We have mixed feelings about that news. Yes, Adidas has consistently gained market shares from Nike for the past 12 to 18 months, and it could continue in the current quarter. Yet, the overall environment isn't really favorable for discretionary consumption, and when your main competitor in the category struggles, it is rarely a very positive sign. Adidas is back to more attractive valuation levels. PE26 stands at 15.9x down to 13.9x and 12.1x for 2027 and 2028.

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