(Reuters) -Shares in Puma fell as much as 10.4% on Thursday after analysts said the sportswear company's third-quarter earnings might miss market expectations due to the impact of a stronger euro against the dollar compared with last year.
The sportswear industry is struggling with weakening demand in North America and a slower-than-expected recovery in China, where Nike (NYSE:NKE), Adidas (OTC:ADDYY) and Puma are facing increasing competition from local brands.
Analysts at brokerage Stifel said Puma's third-quarter earnings before interest and tax might decline by a low double-digit rate compared with last year, a worse performance than consensus expectations for a 6% decline.
They said mid-single-digit organic sales growth was more than offset by a stronger-than-expected negative foreign exchange impact.
Nike also flagged "unfavourable" changes in currency exchange rates when it released its results and Inditex (BME:ITX) last month said it now sees currency shifts taking 3.5% off its sales this year, worse than the negative 2.5% impact it expected previously.
Thursday's drop in Puma's shares put them on course for their worst day since March 2020.
Puma declined to comment on the share price move but said it was fully on track to achieve its full-year guidance.
Puma is targeting EBIT of between 590 million and 670 million euros for 2023, from 641 million euros in 2022.
RBC analysts said the top end of Puma's full-year 2023 guidance may be out of reach, and the likelihood of a guidance raise for the full year had diminished.
Puma is set to report its third-quarter results on Oct. 24, while rival Adidas' results are due on Nov. 8.
Adidas shares were down about 2.7%.
Analysts see potential for a fourth-quarter bounce even if the third quarter disappoints.
"We expect Puma to reconfirm a view that Q4 organic growth should reaccelerate once more, as the worst of the U.S. overstock hit starts unwinding," analysts at Jefferies said.
High inventory levels in the United States, a hangover from supply chain issues during the pandemic, have weighed on apparel retailers' performance in that market.
Stifel analysts also said they expect Puma to show an improvement in inventory levels, and that the fourth quarter would be a "turning point" for the company.