Adidas is outrunning Nike — and its comeback has legs -8days
The question now is no longer how quickly can the German company recover but how long can it keep up the momentum.
Two years ago, the idea of Adidas striding ahead of its US rival Nike would have been laughable. Back then, the German company was in crisis after parting ways with the rapper Kanye West. Today, while Nike is flagging, Adidas’s shares are on a winning streak.
Adidas issued its third guidance upgrade in six months this week. Full-year operating profit is expected to reach €1.2 billion (US$1.42 billion; S$1.87 billion), more than double initial expectations. Revenues are forecast to grow at a 10 per cent clip, in neutral currency terms. Gross margins in the third quarter of 51.3 per cent were up 2 percentage points on the year and comfortably ahead of Nike’s 45.4 per cent.
The question now is no longer how quickly can Adidas recover but how long can it keep up the momentum.
Its shares are up 120 per cent since ending the West (now known as Ye) tie-up in October 2022, although they are still far off 2021 levels. The last of the partnership’s Yeezy line of sneakers, around €50 million worth, are expected to be cleared this year, contributing zero operating profit.
Other models such as Gazelle, Samba and Spezial have picked up the baton. Spending on research and development is paying off, with so-called performance shoes up 10 per cent-plus in the latest quarter compared with the same period last year. So too is the decision to return to independent shops, reversing an earlier strategy to focus on direct-to-consumer and wholesale channels.
Its performance is broad-based — by channel, geography and category, sales are mostly up by 10 per cent-plus. Trend-leading Japan and South Korea lifted sales 18 per cent in the third quarter. North America, where sales fell 7 per cent, was a notable exception.
