Adidas AG is gaining ground in its rivals’ home turf.
As Nike picks up the pace and Under Armour’s struggles continue, the Germany-based sportswear firm noted growth of 10% in North America following months of supply chain troubles, signaling promise in the region’s highly saturated sneaker market.
In its third-quarter earnings report, Adidas said that it had rebounded from challenges in its manufacturing network — with its Asia-based suppliers, in particular — that had dented gains early in the year.
“We’re more or less out of the constraint when it comes to the supply situation — we’ll have the latest impact in the fourth quarter … and then we’re completely out of it,” CEO Kasper Rorsted said in the company’s conference call today.
Adidas has shifted focus to the United States in recent years, forging partnerships with A-list celebrities including Kanye West and Beyoncé on their respective Yeezy and Ivy Park lines. The brand has also ramped up its fashion athletic offerings through the release of popular retro silhouettes, and it has banked on its UltraBoost franchise, which had double-digit gains of more than 20% in the quarter.
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Rorsted said early this year that Adidas suppliers — 71% of which are in Asia — had been unable to keep up with the demand of footwear and apparel goods. However, the executive revealed in today’s call, that “relief” in its current supply chain “now allows us to ship more freely.”
Overall, revenues for the Adidas brand shot up 9.5% to 5.8 billion euros ($6.4 billion), driven by solid sales in both sport performance and sport-inspired categories as well as acceleration in the Originals footwear business. Additionally, the brand is anticipating the release of more colorways of its top-selling Continental 80 lifestyle sneaker and celebrating the 50th anniversary of its iconic Superstar design starting in December.
“If we look upon the introduction of products in 2019 compared to the products of 2018, we’ve had a substantially more stable and more successful introduction of new products,” Rorsted said. “A lot of the products we do put into the market, we don’t drive to volume immediately because we want to make certain that we get the highest lifetime value out of them.”
The athletic giant also pointed out recovery in its long-struggling Reebok brand, which contributed to total sales with a 5.4% increase to 460 million euros ($509.6 million).
“We had the deepest restructuring in North America, where we closed a lot of retail stores,” Rorsted added about Reebok. “That’s why you see the pronounced growth in North America, and that is something that we want to see in other markets going forward as well.”
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