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Shares in Puma, Adidas Slide After Nike Warns of FY Gross Margin Pressure

By Scott Kanowsky

Investing.com -- Shares in European sports apparel retailers Puma SE (ETR:PUMG) and Adidas AG (ETR:ADSGN) slumped on Friday after their U.S. peer Nike Inc (NYSE:NKE) warned it may face margin tightness during its current fiscal year.

The Oregon-based firm now sees annual gross margin sliding by as much as 250 basis points due to higher markdowns, a spike in the value of the U.S. dollar, and a rapidly accumulating stock of unsold items. Nike reported that inventories grew by 44% to $9.7B in the first quarter.

Analysts at Stifel said that strong consumer demand during the period was overshadowed by ongoing supply chain constraints, adding that this trend will ultimately weigh on margins.

Meanwhile, Jefferies analysts flagged to Reuters that there are concerns that increased margin pressure for Nike could impact its industry rivals.

Shares in Nike fell sharply in early U.S. trading.

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