After closing 2014 with a loss, CEO for Adidas Group, Herbert Hainer, reiterated his confidence in his company’s ability to turn things around. While the world’s second-biggest sportswear group credits the strong momentum of its core Adidas and Reebok brands with providing the ammo for robust sales growth in 2015, some analysts say “not so fast.”
“It’s true that Reebok, on a currency-neutral basis, eked out barely at 0.6 percent improvement but without that currency-neutral adjustment, they’re actually in the negative,” said Morningstar Analyst Paul Swinand. “They’re doing poorly in the North American market.”
Adidas’ net sales for the quarter grew at double-digit rates in Western Europe, Greater China, European Emerging Markets and Latin America, while North American net sales dipped 4 percent on a currency-neutral basis.
Christopher Svezia, analyst with Susquehanna Financial, said Reebok and Adidas are experiencing a tougher market position in the U.S. compared to other markets.
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“Reebok has not been resonating nearly as well in the U.S. as it has [internationally]; it’s declining and expected to decline in 2015,” said Svezia. “I think there’s product that they come up with that works well in other markets that just don’t translate in the U.S.”
Analysts have been buzzing about the consequences of Dick’s Sporting Goods, Inc.’s decision—announced in a conference call March 3—to reconfigure store space to accommodate its new Calia brand under Carrie Underwood. Edward Stack, Dick’s chairman and chief executive officer, said he would take away space from Adidas and Reebok for the new line.
While Stack clarified on a subsequent conference call on March 4 that Dick’s is not “kicking Adidas off the shelves,” experts were abuzz that the move further solidified the brand’s decline against competitors like Nike and Under Armour.
“Adidas will grow but not as quickly as Nike, Under Armour or the new Carrie Underwood line,” said Svezia.
Despite chatter, Adidas’ outlook for 2015 is optimistic. It expects sales to rise at a mid-single-digit rate and net income from continuing operations to increase at a rate of 7 percent to 10 percent.