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Shares of the Finnish athletic equipment company have experienced a decline over the past three trading days, as fallout from a subsidiary’s controversial fireworks display in the Himalayas last weekend spreads from environmental protests to financial markets.
The company’s stock, which is controlled by a group led by a Chinese sportswear brand, fell 5.82% on September 22, followed by a 2.75% drop on September 23, and a slight decrease of 0.47% yesterday, closing at $34.14.
The fireworks controversy has also triggered financial analyst downgrades. A prominent U.S.-based bank reduced its price target on the stock from $50 to $42 on September 22. In its analysis, the bank noted that most of the negative response is centered around the outdoor apparel brand, while other affiliated brands seem to be largely unaffected.
Profits Realized
Despite the recent declines, the stock has more than doubled since the company went public last year with an initial offering price of $13 per share, and several major shareholders are taking advantage of the surge to realize profits.
One private equity firm, part of the original buying group, has reduced its holdings by roughly 35 million shares, cashing out about $1.3 billion. The firm, based in Hong Kong, still owns a 6.2% stake.
Meanwhile, Chip Wilson, the founder of a Canadian athletic apparel retailer and also an original investor in the group, sold over 4 million shares in August for approximately $159.7 million. He continues to hold around 18% of the company’s shares.
Increasing Criticism
The subsidiary’s outdoor brand has gained popularity among outdoor enthusiasts in recent years, but its prices have also increased rapidly. Since 2022, the company has raised prices multiple times. Wang Jiaqi, a frequent buyer of the brand’s products before its acquisition by a major Chinese sportswear firm, noted that in Japan alone, the brand increased prices twice in 2023, in August and December — with some product prices rising by as much as 25% in December.
This has sparked criticism from loyal customers, who’ve taken to online platforms to complain, claiming the brand seems to be positioning itself alongside luxury labels like Louis Vuitton and Chanel, despite no improvements in quality despite the higher prices.
The complaints continue to grow. A search on a popular consumer review platform revealed over 3,000 posts related to issues with the brand, including shoes falling apart, jackets pilling and bulging, and logos peeling off clothing.
Experts suggest these complaints point to areas where the company could improve, such as after-sales service, craftsmanship, and product quality. With higher prices, consumer scrutiny intensifies, and the brand may face increasingly tough judgment in the future.
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