Brief

Adidas gunning for Nike as it shatters sales records

Dive Brief:

  • Adidas on Wednesday reported revenue growth in nearly all market segments for the fourth quarter and full-year 2016, and increased its sales and earnings guidance into 2020.

  • The athletic apparel maker's Q4 revenues rose 14% on a currency-neutral basis; in Euros, revenues grew 12% to €4.687 billion (about $4.95 billion U.S.) from €4.167 billion in 2015. At the Adidas brand, currency-neutral sales grew 18%, despite tough comparison from the prior year (related to the first sales of UEFA Euro 2016-related soccer products), gains driven by double-digit growth in the running category as well as at Adidas Originals and Adidas Neo and by high-single digit growth in the training category. Currency-neutral sales at the Reebok brand were up 3%, supported by high-single-digit sales increases in the training category and in Classics.

  • Adidas said it intends to strongly accelerate sales and earnings growth until 2020 as part of its long-term strategic business plan, dubbed “Creating the New.” The company expects currency-neutral sales to increase on average 10% and 12% annually between 2015 and 2020, a boost from its previous guidance for a “high-single-digit rate.” Net income from continuing operations is projected to grow between 20% and 22% on average per year in that period, up from previous guidance of closer to 15% on average.

Dive Insight:

After having wrested its number two spot back from upstart rival Under Armour last year, Adidas​ seems intent on gunning for number one Nike. 

After five bad years in the United States, the German sports apparel giant last year announced a three-pillar turnaround strategy, emphasizing Speed, Key Cities and Open Source. The company gave further details of that strategy later in the year, and it’s been roaring back since tapping former Henkel chief Kasper Rorsted to replace the embattled Herbert Hainer as CEO.  

As part of a comeback, Adidas has also increased its collection of streetwear and ramped up its partnership with athletes as well as creatives. The German sportswear giant announced that it is expanding its relationship with music and fashion icon Kanye West, developing “a Yeezy-branded entity creating footwear, apparel and accessories for all genders across street and sport.”

Adidas's Q4 results are "proof positive that our strategy ‘Creating the New’ is paying off,” Rorsted said in a statement. “Building on our 2016 performance, our momentum continues and we will again achieve strong top- and bottom-line improvements in 2017.”

Speaking at a press conference Wednesday, Rorsted said Adidas will "over-invest" in the U.S. market, emphasize fast fashion and accelerate its supply chain efforts, according to Bloomberg. Adidas also will divest itself of its CCM hockey brand, emphasizing its namesake label as well as its Reebok business.

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