Previewing Adidas and Puma, following Nike results Ahead of Q3 results from Puma (27 October) and Adidas (10 November) we cut forecasts to reflect the impact of inventory shortages caused by Vietnam lockdowns and weaker demand in China due to Covid confinement. These issues were flagged and somewhat quantified by Nike last week. We are bulls of the sporting goods sector but the impact of inventory shortages will likely spill into H1 2022 and increase the near-term uncertainty for the stocks. Vietnam lockdowns still the main issue on the horizon... Vietnam is a key manufacturing hub for Adidas and Puma, as we show in Figure 1 inside. The lockdown across South Vietnam since end-July is well known and is likely to impact inventory levels in 4Q21 and 1H22. The surprise from Nike''s results was that supply congestion affected the last quarter more than anticipated, with Asia to North America transit taking 80 days rather than 40 days pre-pandemic. As well as lost sales, there is also a gross margin impact of re-sourcing inventory from other countries and using air freight. This should somewhat be mitigated by operating cost savings. ...but China is also taking longer to recover The brands are currently facing three issues in China: the Xinjiang cotton backlash, albeit fading, we think; Covid-related confinement of the population; and supply constraints. Nike said the supply shortages would impact Asia earlier than other regions as the region has less in-transit inventory. Widespread industry commentary suggests that western brands had recovered somewhat in July, to around prior year levels of sales and footfall, only for Covid restrictions to impact August severely. Expect consensus to fall, still fans of the long-term We lower our Adidas and Puma FY 2021 forecasts, which were already below consensus for both, by mid-single-digits, and our FY 2022 forecasts by low single-digits, assuming some spill-over effects of inventory shortages in early...