Source: New Adidas CEO acts to reshape Reebok, support growth | Reuters
On October 25th Kevin Plank announced that the projections for profit would be lower in the next few years as Under Armour begins to ramp up marketing efforts to keep pace with the resurgent Adidas and the beast that is Nike. Immediately this sent Under Armour shares plummeting and the UA world was coming to an end. Nevermind the company continues to see growth and that they have some exciting products in the pipe that if marketed correctly could see them continue their startup styled maturity. All the market could see was that there wouldn’t be dividends anymore so people dumped the stock.
Today it’s reported Adidas will restructure Reebok, and reinvest profits to continue its growth in North America and adidas shares remained steady. It doesn’t matter that Reebok is a weight that is slowly getting usurped by companies in athleisure and a Crossfit community that isn’t satisfied with the brand. Nevermind that adidas’ growth is fragile and is currently hinged on the decision making of kids who shift with the next new trend. Nevermind that adidas is in the process of eliminating dead weight in its golf division. All of these extra weights on adidas are not even being considered, the stock is now a must buy.
Click through and read this report and explain to me why the difference in reaction to what is basically the same report? Maybe I’m just not as sold on adidas as the world is. Maybe it’s because I run a shop and I see that adidas’ big sellers are primarily low margin items and the middle of the pack performers are often on discount and not moving. I mean last year I couldn’t keep ZX Flux in stock, this year I can’t move them at half off. Three months ago the Tubular Strap was being sold at above retail, now it’s discounted. The Derrick Rose line is a flop, and Andrew Wiggins hasn’t paid off. James Harden won’t sell any shoes, and adidas keeps restocking their NMD and UltraBoost shoes which is decreasing the hype and demand that has served them so well. When the CEO, Rorsted said he’s cutting stores for Reebok, to me that’s not a reason to celebrate the growth of adidas. If you’re in the market it would be smart to hold off on acquiring more shares of the brand based on 2016, because all it takes is a season like the NBA is experiencing already to change the fortunes of the Three Stripes.
Click the source link to read more.
No sooner than I wrote this, the stock dropped from 81 to 75/share: http://www.wsj.com/articles/why-adidass-new-boss-is-talking-down-prospects-1478179523
Adidas is doing too much. After buying Reebok, Adidas should have used them as their “poor man’s” brand instead of trying to maintain the luxury that Reebok had during the 90s and AI days. They should have saturated Walmarts and Kmarts with them and built up vast revenue like that while having Adidas maintain. Adidas is never going to kill the men’s basketball market. Keep the focus on soccer and dive more into football or even try to kill with the WNBA. There are so many folks in the NFL and WNBA who could easily and cheaply rep the brand and apparel. They’re spreading themselves far too thin.
They lose the WNBA next year when Nike takes over. I don’t agree that they are doing too much at all. I do agree that Reebok is a weight and they should sell it, but if they are making the adjustments of closing stores like the article states, they are going to keep Reebok. As far as saturating Wal Mart, if you go to the homepage and look at my brand discussion on And1 their holding group has decided that was flawed logic, so I don’t think it’s a play for Reebok. The brand has a great history and they aren’t capitalizing on it at all. Thanks for dropping in Shay!!!