By Sara Germano 

BERLIN -- Adidas AG is growing sales around the world and has rebounded from supply-chain challenges and stumbles in its home market. But Nike Inc.'s rising dominance in shoe technology could put the German sportswear maker on the back foot.

For weeks, the talk of the sneaker industry has been Nike's controversial Vaporfly shoes, which have slashed race times for recreational runners according to running app Strava, powered two record-shattering marathons and reignited talk of footwear regulation in professional running. Vaporflys are so widely believed to enhance performance -- due to their unique incorporation of an extra-thick sole and a carbon-fiber plate -- that there are questions as to whether they should be permitted in races.

Where does that leave Adidas? According to analysts -- and the company's third-quarter results -- it is financially and operationally on track. But some say there is a lack of excitement around Adidas' footwear offerings. The white-hot demand for its Superstar and Stan Smith fashion shoes has cooled in recent years and Adidas' performance-running line, the Boost, is more than six years old.

"Adidas is doing a nice job, not a great job, while others are doing better from a product and consumer engagement standpoint," said Christopher Svezia, footwear and apparel analyst at Wedbush Securities. "They've got to come up with something more exciting."

On Wednesday, Adidas Chief Executive Kasper Rorsted said the company has developed many product iterations within the Boost line since the franchise made its debut in 2013.

"We are striving to build the top running shoe for the best athletes and the top running shoe for people like you and me, who go out and run in the morning," he said. "I'm not going to comment on our competition specifically, but our aim is of course to have the best running shoe in the market."

The company reported higher sales overall in the third quarter, as well as in the crucial North American and Asia-Pacific markets. Shares fell 2.6% to EUR274 ($303) in Frankfurt trading.

Graham Renwick, an industry analyst at Berenberg, said that Adidas's latest Boost running shoe, the UltraBoost19, is a "technically superior shoe to earlier iterations," and that the line had contributed to Adidas's market gains in North America.

According to a Wall Street Journal analysis of the six major global marathons, Adidas athletes have won fewer titles since the Vaporflys were introduced by Nike in 2017, with just two victories in 2019, down from four in 2016. Nike runners, won 10 major marathon titles this year, up from eight in 2016.

In the last year, both the men's and women's marathon world records were smashed by runners wearing Vaporflys, and Kenyan marathoner Eliud Kipchoge broke the two-hour marathon in an unsanctioned race in October.

Inside Adidas, frustration about the Vaporfly shoes isn't directed at Nike but at the International Association of Athletics Federations, according to a person familiar with the matter. Executives want the sport to be more proactive about investigating if specific shoes confer competitive advantages, according to the person.

This spring, the IAAF formed a group to review whether a footwear rule change is needed. Its results are expected later in 2019.

Adidas' Mr. Rorsted said the world-class athlete market is "very important" to the company but that it represents a fraction of the commercial success of its running business.

Net sales of Boost running shoes have totaled approximately EUR2.5 billion in the first nine months of this year. Nike typically doesn't break out sales of individual shoe models and precise sales of the Vaporfly franchise weren't immediately available.

Adidas' sales for the quarter ended in September rose 9% from the comparable period a year earlier to EUR6.4 billion, while profit fell 2% to EUR646 million, in line with the company's guidance. Adidas sales in its home market of Europe were flat, while North America and Asia Pacific posted sales increases of 13% and 11%, respectively.

Adidas said that the first products from its partnership with music icon Beyoncé are still set to launch in 2019 -- a move aimed at driving excitement in the lifestyle category that represents about a third of the company's business.

Laine Higgins contributed to this article.

Write to Sara Germano at sara.germano@wsj.com

 

(END) Dow Jones Newswires

November 06, 2019 07:19 ET (12:19 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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