Adidas Group revenues for the third quarter beat forecasts, but footwear sales decelerated — and some analysts speculated that slowing Yeezy momentum could be partly responsible.
The German-based athletic giant reported a Q3 revenue increase of 9% to 6.41 billion euros ($7.1 billion), but footwear sales rose just 1% during the quarter — compared with growth of 8% in last year’s same period.
Since Adidas doesn’t break out the financial specifics on various products lines — and overall Adidas Group footwear sales also included contributions from owned-brand Reebok — it’s unclear exactly how much Yeezy contributed to shoe sales during the period. But, CEO Kasper Rorsted told investors the Kanye West-led line did not experience growth during the quarter — neither was it expected to do so — due to difficult year-over-year comparisons.
“Yeezy was not planned [to grow] and did not grow in the third quarter as it was competing against the biggest Yeezy released ever, which was executed in the prior quarter,” Rorsted said.
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In that same vein, Adidas’ chief also attributed a deceleration in overall e-commerce sales — which grew 14% during the period, compared to a 76% increase a year earlier — to softer Yeezy growth but added that he expects a return to “a more normalized growth rate for [e-commerce] in the fourth quarter.
Rorsted also told investors Thursday that Q3 2018 was the best performing quarter for Yeezy to date.
Although the executive did not specify what the “biggest Yeezy released ever” was, the largest product drop during Q3 2018 was the Yeezy Boost 350 V2 “Triple White” restock, which was the brand’s first attempt at mass distributing a West-designed shoe. The restock hit stores on Sept. 21, 2018.
Two months after the restock, Rorsted — alongside North American president Zion Armstrong — spoke with FN about the Yeezy business. During the discussion, Rorsted said he wasn’t concerned with mass production of a specific style hampering the buzz and demand for other Yeezys in the future.
“I think the brand can carry much broader products than it has so far, and we’re just getting to phase 2 in what we’re doing with Kanye. If we didn’t continue to renew the products he’s bringing out, eventually you could get some fatigue. But I don’t think there’s risk for fatigue with what we’re doing. Actually, it’s on the contrary,” Rorsted told FN in November 2018.
Armstrong added, “The Kiths and the Packers — they’re not seeing challenges with this. And what we’ve seen with the most recent scarcity drops — Desert Rats and 700s — is that sell-through has been instantaneous. We’re making sure the pipeline is full of newness and, at the appropriate time, commercializing what’s been in the market for two years.”
Aside from Yeezy, the exec said soccer sales declined, however, Adidas will look to capture the momentum created by the 2020 UEFA European Football Championship.
Despite the Yeezy and soccer declines, Rorsted noted during the call that Adidas’ Boost franchise, led by the UltraBoost business, grew 20%.
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