German-based footwear and apparel company Adidas (ADDYY) is expected to redouble its U.S. efforts as newly instated Chief Executive Officer Kaspar Rorsted announces his businesses strategy plans next week. Shares of Adidas, closing at a price of $84.81 on Wednesday, reflect an approximate 59% year-over-year (YOY) increase, as the company expands outside Europe and makes significant headway against its U.S. competitors.
Retro-Style Shoe Beat Nike in 2016
Europe’s largest sportswear manufacturer touts its Superstar sneaker as the top-selling shoe in U.S. market in 2016. Adidas’ retro-style sneaker outpaced nine Nike Inc. (NKE) styles, reports Reuters.
As evidence of the sportswear brands’ success in the U.S. market, various American sports retailers such as Dick’s Sporting Goods Inc. (DKS) and Foot Locker Inc. (FL) have announced plans to lay out more space for the company. Last week, Foot Locker CEO Dick Johnson said Adidas was leading growth of lifestyle running shoes with its innovative product pipeline, including shoes designed by rapper Kanye West. German-based Adidas rival Puma droves sales of the Foot Locker’s women’s segment, posting gains in the double digits.
According to market intelligence firm NPD, Adidas doubled its share of the U.S. athletic footwear market to 10% in January. By comparison, market share of Oregon-based Nike remained constant at 45% while Under Armour Inc.’s (UAA) continued to decline. As Under Armour struggles to stay afloat, posting a large decline from double-digit growth over the past few years, Adidas is taking its place as Nike’s biggest threat. (See also: Can Under Armour Make a Comeback?)
Analyst: ‘New CEO Likely to Strike an Ambitious Tone on Margin’
Analysts expect Adidas to boost its operating margin up from 6.3% in 2015, just half the size of Nike’s.
“The new CEO is likely to strike an ambitious tone on margin,” a team of UBS analysts wrote in a research note last week, in which they upgraded shares of the German firm to a buy rating. “We see opportunity for Adidas to surprise on sales growth, gross margin and operating leverage.”
Rorsted, who stepped in as Adidas’ CEO in October, is expected to present highlights of his strategy review on March 8, following up in-depth at an investor day a week later.