Will Adidas look to capitalize on U.S. market?
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

Will Adidas look to capitalize on U.S. market?

German trainer maker and accessible luxury apparel maker Adidas is on a roll. Over the last 12 months, the company has seen its share price appreciate by 66% - and a big part of the underlying success that drove that increase has come from the company’s push outside of Europe and into the U.S. market. With fresh CEO Kaspar Rorsted planning to announce his business strategy this week, many analysts feel it’s a safe bet that he’ll look to build on recent success in the U.S.

Adidas outpaces the competition for 12 months

adidas gph

SOURCE: Yahoo Finance

Key to Adidas’ success in 2016 was the fact that it had the best-selling trainer on the market. Its Superstar sneakers outpaced nine Nike styles, according to Reuters. But Nike is holding up okay – while Adidas’ share price has soared over the past year, Nike’s has remained pretty much flat. Not so Under Armour: the ‘third name’ in accessible sporting apparel has seen its share price decline by almost as much as Adidas’ has risen.

There is a similar story to be told regarding market share in the U.S.  According to market intelligence firm NPD, while Nike – by far the market leader with 45% – has remained stable over the last 12 months, Adidas has doubled its market share to 10%. In the same period, Under Armour has witnessed a steady decline, and is now fighting to reclaim a shadow of its former glory.

According to a team of UBS analysts writing in a research note last week, Adidas may look to boost its operating margin, which was just half the size of Nike’s in 2015:

“The new CEO is likely to strike an ambitious tone on margin. We see opportunity for Adidas to surprise on sales growth, gross margin and operating leverage.”

With Rorsted expected to present highlights of his incoming strategy on Wednesday, it’s not long until we find out whether they’re right.

Dominion holds Adidas in its Global Trends Luxury Fund.

If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.