- Global shoe and apparel companies, including Adidas, Nike, and Puma, lower sales expectations, raising concerns about potential decrease in consumer spending.
- Adidas CEO acknowledges disappointing financial performance, attributing it to global consumer sentiment and lack of enthusiasm for their products.
- Reduced consumer spending trend extends beyond shoes and apparel to streaming industry, with rising prices prompting consumers to choose only one service, leading to further industry consolidation.
Additional Coverage:
- Once-unstoppable consumers are finally tapping the brakes—and Adidas, Nike, and Puma are taking a beating from sinking sales (fortune.com)
Tough times may be ahead for the global shoe and apparel companies, as their lackluster sales guidance has raised concerns. Adidas, the world’s largest shoe and apparel company, saw its share price drop by 9% before recovering slightly. The company’s sales and profits for 2024 are predicted to be weaker than what analysts expected. It also plans to get rid of its remaining Yeezy shoe inventory due to the termination of its deal with rapper Kanye West. Competitors Nike and Puma have also cut their expectations for the coming year, leading some to worry about a potential decrease in consumer spending.
Adidas CEO Bjorn Gulden admitted that the company’s financial performance was not satisfactory and asked for patience as they continue to work towards improvement. He acknowledged that consumer sentiment worldwide is not great and that people are not eagerly lining up to buy their products.
When asked for comment, Adidas directed to their press release. Puma declined to comment due to being in its quiet period, and Nike did not respond immediately.
The current trend of job layoffs, stagnant pay raises, and workers staying longer in their jobs may cause consumers to be more cautious with their spending. The average consumer wants to get the most value for their money, which could negatively impact shoe and apparel companies struggling to attract customers at higher price points, according to Citi analyst Monique Pollard.
This trend of reduced consumer spending can also be observed in the streaming industry. Although Netflix reported strong revenue and profit results, its competitors did not experience the same success. Rising prices of streaming services may prompt consumers to choose only one service and cut out the others. Netflix predicts further consolidation in the industry.
While a decrease in consumer spending could be detrimental to the economy, it might be beneficial for Federal Reserve Chairman Jerome Powell. Powell, who is closely monitoring the slow cooling of inflation, mentioned in a press conference that the Federal Reserve would not be lowering rates anytime soon. However, a slowdown in spending could change Powell’s stance. If consumers are less willing to spend, producers and retailers may lower prices, ultimately helping bring inflation closer to the Federal Reserve’s 2% target.