Adidas on the trot with new-look shoes
Strong second-quarter results leave rival Nike in the dust and drive up the share more than 10%
Berlin — Adidas reported strong second-quarter results on Thursday, as its sales growth outpaced rival Nike in North America where new styles are proving popular even as the German company stagnated in Western Europe.
Shares in the company famous for its three-stripe brand soared more than 10% to a four-month high, putting them on track for their best day since the group increased its financial guidance in March.
The results are the latest endorsement of a strategy pursued by CEO Kasper Rorsted since taking over in 2016, focused on improving profitability as well as expanding in North America and China and pushing sales via e-commerce.
Some investors feared that Adidas would struggle as the popularity of its retro Stan Smith and Superstar shoes waned in the past 18 months. Promoted by singer Pharrell Williams, the Superstar was the top-selling shoe in the US market in 2016.
But Rorsted said Adidas had managed the fashion cycle carefully, trying not to oversupply old styles, while stepping up promotion for new lines such as its springy Ultra Boost running shoes and the Parley, made out of recycled ocean plastic.
The 1980s Continental leather sneakers that were relaunched in June were already selling out, Rorsted said, and a broadening of a partnership with rapper Kanye West was planned, after earlier designs made in limited quantities.
Tighter control of supply helped Adidas sell more shoes at full prices in the quarter, helping to counteract higher marketing spending due to the Soccer World Cup.
However, Rorsted admitted the firm had failed to focus enough on the launch of new products in Western Europe, prompting management changes in the region. Sales were likely to stay flat in the region in the second half of the year.
While Adidas has been taking market share from Nike in North America, the US firm has been powering ahead in Europe, Middle East and Africa, with sales up 10% in its March-to-May financial fourth quarter.
Group sales rose 10% to €5.26bn after currency effects, beating the 8% expected by analysts, while attributable net profit of €396m was also ahead of the average forecast for €386m.
Adidas saw sales growth in North America slow slightly to 16%, but that was still well ahead of the 3% growth Nike reported for March to May.
In greater China, Adidas sales growth rose to 27%, slightly ahead of Nike’s 25%, and they jumped 14% in Russia, which hosted the World Cup.