Will Adidas ever be able to catch up with Nike?
A few years ago, it seemed like Adidas might give Nike a run for its money as the world’s largest sportswear manufacturer. While the American giant was still ahead, its German competitor with the three stripes was making strides. Under the leadership of Kasper Rorsted, who became CEO in October 2016, Adidas’ revenue increased by about 30% in the first three years of his tenure. The lucrative deal to produce and sell sneakers designed by American rapper Kanye West, which began in 2013, was paying off handsomely. By 2021, West’s Yeezy line accounted for 12% of Adidas’ total shoe sales. In August of that year, the company’s market capitalization reached €67 billion ($79 billion), more than twice what it had been five years earlier.
Mr. Gulden’s first task is to decide what to do with all the Yeezys (options include trying to sell them, possibly handing the proceeds to charity, donating them to a good cause, such as the victims of the recent earthquakes in Syria and Turkey, or just binning them). A bigger long-term challenge, says Aneesha Sherman of Bernstein, a broker, is what to do about China. Last year, Adidas’ Chinese sales fell by 36%. China’s strict pandemic lockdowns and boycotts of Western brands that expressed concern about China’s treatment of its Uyghur Muslim minority both played a role; Nike’s Chinese sales also declined in its latest quarter, by 8%.
However, unlike Nike, China’s top-selling sportswear brand, which has adeptly adapted to local tastes, particularly the growing love of basketball, Adidas has been caught off guard. Its Chinese sales have been surpassed by those of Anta, a fast-growing local competitor. Now, it risks losing its position as the third-largest to another competitor, Li Ning.
2023-03-23 10:17:05
Original from www.economist.com