Analysis – As Nike struggles, Adidas must navigate Samba wave with caution By Reuters

By Helen Reid

LONDON (Reuters) – NIKE ( NYSE: )’s continued struggles give Adidas ( OTC: ) a chance to continue to take market share from its larger U.S. rival, but the German brand will have to work harder to keep shoppers interested in its patio sneakers Samba and Gazelle.

Shoes have boosted Adidas’ sales over the past year, and analysts expect it to report third-quarter revenue of 6.4 billion euros, up 10 percent from a year ago in currency-adjusted terms, when reports earnings on Oct. 29.

But more than a year into the trend, the Samba won’t remain the “work shoe” for much longer, say industry experts.

“Adidas, the more modern consumer, they already have the shoes. Now we’re looking at them (Adidas) milking the rest of the downtrend by introducing lower prices on the patio,” said Aneesha Sherman, an analyst at Bernstein.

“They can still get a ton of growth out of it because there are still latecomers who don’t have these shoes yet or maybe they didn’t want to pay the $100 price but are willing to pay a $60 price,” he added it. .

In an attempt to appeal to shoppers who want to buy into trends but still want to feel unique, Adidas continued to produce new colorways for the Samba, Gazelle and Spezial, with some models featuring tongues like soccer cleats and contrasting stripes in the materials us. like velvet.

That’s kept third-party retailers like JD (NASDAQ: ) Sports happy for now. At its half-year results on July 31, Adidas CEO Bjorn Gulden said the brand was still “chasing demand” from retailers.

“There’s always this push and pull, the consumer wants more, the retailers want more, but the brand has to step away and say we’re going to pull this back to make sure we keep it for a long time,” he Matt Powell said. Sneaker Industry Expert and Senior Advisor at BCE (NYSE:) Consulting.

“Adidas would be right to really put the brakes on the Samba and Gazelle to make sure they drive sales,” he said. Sell-through refers to the percentage of product that a retailer sells after receiving it from a supplier.

There are signs that the brand’s focus is shifting to other shoes, such as the Campus and retro SL72 running shoes, while the Paris Fashion Week show featured a new Adidas shoe modeled on motorsport racing shoes, tapping into the trend in growth around Formula 1. which last week announced a 10-year partnership with luxury group LVMH.

Adidas can also no longer rely on strong revenue and profits from its remaining stock of Yeezy sneakers, as demand for the shoes designed by rapper Kanye West has declined. In August, an Adidas email to members of its sneaker club advertised up to 70 percent off Yeezys.

Still, with Nike pulling back its annual guidance and signaling a weak holiday trading season as a new CEO takes the helm, Adidas has a unique opportunity to grow, particularly in the US, where Nike is particularly dominant and Adidas he relies heavily on his Yeezy range.

In Europe, Adidas has gained market share over the past year, while Nike’s share has declined, according to consumer edge direct-to-consumer sales data, which also shows significant gains by On Running, Puma and Hoka.

Bernstein’s Sherman expects Adidas to continue to gain weight for next year as Nike will need time to turn around its performance.

“That could change, if Nike released a strong lifestyle shoe in the spring, and if it caught on and won in the summer, we could see a change – if the it shoes of summer 2024 were Samba and Gazelle, next summer’s it shoe could be something from Nike,” she said.