Adidas sees Samba shoes driving more interest from retailers
5632 Mins Read
By Helen Reid
LONDON, Nov 8 (Reuters) – Adidas struck an optimistic note on Wednesday as it reported a drop in inventory levels, saying retailers are “visibly” more interested in its autumn/winter 2024 range as the German sportswear giant seeks to boost its brand’s appeal.
CEO Bjorn Gulden, in the job since Jan. 1, has been driving a turnaround at the company bruised by last year’s break-up with rapper Kanye West, who goes by Ye, which left Adidas with unsold Yeezy shoes worth 1.2 billion euros ($1.3 billion).
Adidas last month lifted its full-year outlook partly thanks to Yeezy shoe releases, and the company said on Wednesday that the popularity of its “terrace” shoe ranges Samba, Gazelle and Spezial was also driving growth in its lifestyle business.
“We see the interest in our brand and products increasing in all markets and are now experiencing a visibly higher interest from retailers for the sell-in for our Fall/Winter 2024 range,” Gulden said in a statement.
Inventory levels were down 23% year-on-year at 4.85 billion euros ($5.18 billion), a little more than expected, Adidas said. Apparel and footwear retailers in the United States and elsewhere are overstocked and slashing prices to help move products off the shelves.
Adidas’ gross margin for the quarter was up 0.2 percentage points at 49.3%, helped by reduced freight costs and fewer discounts.
“Adidas’ competitive position compared to Nike is improving,” said Robert Schramm-Fuchs, portfolio manager at Janus Henderson, which holds Adidas shares.
Gulden has been focused on building stronger relationships with its wholesalers after previous management prioritised its own stores and website, Schramm-Fuchs said.
“Adidas needs to earn back the shelf space, but I think they have the right product to do it,” he said.
But the shift in focus onto wholesale also comes as newer running and lifestyle brands increase competition.
“Hoka, On Running, and others are taking space in some of the more premium sports retailers,” said Adam Cochrane, analyst at Deutsche Bank.
Currency-adjusted sales in North America fell 8.8% due to reduced sales to wholesalers there, Adidas said, adding that high inventory levels in the United States would continue to impact its business “for a while”.
Footwear revenue grew 6% over the reported quarter while apparel sales declined by 6%, a trend seen across the sportswear industry as shoppers prioritise more essential purchases.
Adidas’ sales in Greater China grew by 5.7% in currency-adjusted terms, a slowdown after growth of 16.4% in the second quarter. The company has been working to rebuild its brand in China, a key sportswear market where it had lost share to rivals.
