The Nike Adidas Puma Olympic Battle Will Have to Wait – Barron’s

Posted: March 26, 2020 at 6:02 am

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...And Puma takes the gold in a time of 9.81 seconds, ahead of Nike in a thrilling race here in Rio.

Billions of people around the world watched Usain Bolt sprint to victory in the Olympic 100 meter final in Brazil on Aug. 14, 2016. Bolt, wearing the iconic Puma-made Jamaican running gear, outpaced Nike-wearing American sprinter Justin Gatlin on his way to athletic immortality.

That same summer, 600 million people watched as Cristiano Ronaldos Nike boots helped Portugal win soccers European Championship, beating a French team lit up by Paul Pogba and his Adidas footwear in the final.

Both the Tokyo Olympics and Euro 2020 have been postponed until the summer of 2021, and sports major brands are set to miss out on millions this year. The Olympics Games have become a battleground for the industry decorated swimmer Michael Phelps, who was sponsored by Under Armour, caused a splash four years ago by wearing Nike on the podium.

Puma, Adidas and Nike have long battled to kit out the worlds best sporting stars and teams at major sporting events, offering bumper sponsorship deals.

Those deals come good at the sporting calendars global events, and they dont come bigger than the Olympic Games. But with global sport on hold, the impact may not be that bad for the sector.

Read: Olympics postponement will make just a dent in Japans GDP. It could have been worse if the games had gone ahead

Earlier this month, Adidas Chief Executive Kasper Rrsted said 2020 would be an exciting year for the company, and said the brand would take center stage at the two major sport events of the year the UEFA Euro 2020 and Tokyo Olympics. It has even provided the match balls for Euro 2020.

The German sportswear giant said the financial impact of the postponements would be between 50 million and 70 million, describing the impact as fairly limited. Bryan Garnier analysts agreed the impact would be limited. Showing its competitive edge, Adidas said that while it would miss out on brand exposure it was the same for all brands.

Puma hasnt publicly quantified the impact but Chief Executive Bjrn Gulden said the Olympics typically spikes interest in sports and drives sales.

Nike Chief Executive John Donahoe was relatively upbeat about the Olympics postponement and said it would not hinder the companys innovation pipeline or product launches.

While global sport has been put on hold, Nikes third-quarter results on Tuesday hinted that the demand for sportswear may hold firm, despite the deepening coronavirus crisis. Adidas and Puma have signaled a significant financial hit at the beginning of 2020, as stores across Asia have been closed, but Nikes performance provided some positivity.

Nikes sales in Greater China fell 4% in the quarter, ending Feb. 29, having been up by double digits in the first two months of the quarter. At the peak, 75% of Nike stores in China were closed in February but now 80% are open. Digital sales climbed 30% in the country in the quarter. RBC analyst Piral Dadhania said the results suggest that sporting goods has perhaps been less affected than other sectors from the Covid-19 shutdown, with consumers focusing on health and well-being while at home. Nike, Adidas and Puma stocks all soared on Wednesday.

Looking ahead. Europe and the U.S. will be tough for Nike, as well as Adidas and Puma, in the coming weeks but the signs of an Asian recovery, and increased interest in sportswear for those stuck at home, bodes well. Crucially, major sporting events have been delayed but not canceled sport will return, and when it does its absence will have made the heart grow fonder.

As Donahoe said on Tuesday: We look forward to when organized sport will be back and running and when they are, well be there.

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The Nike Adidas Puma Olympic Battle Will Have to Wait - Barron's

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