Source: U.S.
If I were to be asked why I thought adidas’ stock prices are falling, I would have said that the heavy promotional environment around the brand has slowed the sell through of full price footwear. My viewpoint is narrow and generally focuses on retail and sneakers as it relates to the success of a brand. While that has proven to be correct on many occasions, in this instance it would be partially correct as the slowdown in growth is due to adidas not anticipating the speed at which they grew in North America.
“The volume grew quicker than anticipated and we didn’t respond quickly enough to that demand signal,” Chief Executive Kasper Rorsted told a news conference, noting that Adidas had doubled its sales in North America in the last three years.
The Rueters article also spoke to an issue that makes me happy to see,
Adidas said it should reach an operating profit margin of between 11.3 percent and 11.5 percent in 2019, up from 10.8 percent in 2018, with the return of the Reebok brand to profit helping it hit a target originally set for 2020 a year early.
Recently I wrote a post on why Reebok should be sold. I still think that it will be especially now that it has returned to profitability and is a more attractive option.
The most important information in this mornings info from CEO Kasper Rorsted is one that has become a bit of a rallying cry for me as I attempt to work with retailers and brands, DTC. adidas saw their biggest growth in their digital transformation. The brand saw a 36% increase in global e-commerce. The added value to shareholders should be enough to offset the supply chain issues which are basically there because of the brand’s growth. I initially saw adidas’ return to sport as counterproductive to the moves the company has made. It’s now looking as if the constant investment into sport is continuing to pay dividends. I still refer to this post for any company using sport as the driver of engagement:
adidas “Calling All Creators” | All In On Sports but Does It Work? | Marketing
adidas is doing solid work and the supply chain issues aren’t as important as the lack of interest in everything adidas except Yeezy, which is a different discussion. Use the source links to read more on this morning’s adidas info.
