Adidas Boosts Sales as Sneaker Race With Nike Steps Up
November 06 2019 - 07:34AM
Dow Jones News
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)
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