The China business, which went well for the US sporting goods manufacturer Lululemon, also gave a boost to the shares of Adidas and Puma on Friday. The Chinese market is “of great importance” for the two German manufacturers, wrote stock expert Frederik Altmann from Alpha Securities Trading about the price gains.
Lululemon presented a surprisingly strong quarterly report after hours on Thursday and raised its forecast for the full year. Goldman Sachs analyst Brooke Roach wrote that Lululemon exceeded market expectations primarily due to very strong business performance in the People’s Republic of China.
Adidas shares responded by jumping to the top spot in the Dax. It rose by 2.6 percent to 168.50 euros and was at its highest level since the end of October. As one of the favorites in the MDax, Puma’s shares gained 4.2 percent to 21.96 euros after having already risen by 4.5 percent on Thursday. Lululemon’s shares recently rose by almost 10 percent in premarket US trading.
So far this year, Adidas and Puma are still among the worst performers on the German stock market: the loss of Adidas shares is currently around 30 percent and that of Puma is just over 50 percent.
Assuming constant exchange rates, the US yoga clothing manufacturer’s China business increased by 25 percent year-on-year, the Goldman Sachs analyst emphasized.
“The comparative figures for China were significantly better than expected, which is partly due to the timing or certain measures, but the recovery is still remarkable even on a quarterly basis.” Roach also pointed to the overall better development of the margin than expected despite the headwind from tariffs.
Lululemon’s growth in net sales in mainland China of around 46 percent in the third quarter was considerable, emphasized stock expert Andreas Lipkow. “This makes investors sit up and take notice and hope for better business for Adidas and Puma.” Even if the companies’ business is only comparable to a limited extent, this strong sales development in China is supported. “Recently, significant consumer restraint, and not just in China, has resulted in weaker earnings. Now the tide could be turning.”
November data on U.S. demand and supply trends in the sporting goods industry, reviewed by Bernstein Research analyst Aneesha Sherman in her recent study, also generally shows improvements. With regard to price increases caused by tariffs, the trends point to continued “relatively stable consumer demand,” she wrote. Improvements in Adidas’ US business development were also noticeable in the fourth quarter.