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Adidas, Struggling In The U.S. Against Top Competitors, Will Increase Marketing

adidas is “struggling to increase revenue in the U.S. amid the dominance” of Nike and growth of Under Armour, according to Aaron Ricadela of BLOOMBERG NEWS. Success in the U.S., where adidas “gets almost a quarter of its revenue, is a priority” for Chair & CEO Herbert Hainer. adidas in ’15 will “start its biggest-ever brand campaign, and has signed some of the top picks” from the NBA’s most recent draft class. Paris-based Bryan, Garnier & Co. stock analyst Cedric Rossi said, “Adidas is suffering from a too-European image. I don’t think U.S. teenagers are thinking of Adidas when they want to buy basketball shoes.” Ricadela noted while adidas “leads the industry in soccer globally, it hasn’t managed to lure enough fans to make much of a difference in the U.S.” Meanwhile, Nike has “stepped up its challenge with increased advertising and sponsorship deals” with the likes of La Liga club FC Barcelona F Neymar and Real Madrid F Cristiano Ronaldo. adidas in ’15 “will increase marketing” to between 13-14% of annual sales. Nike by contrast spent 11% of sales on marketing for the fiscal year that ended May 31. Estimates show that adidas, which reports Q3 earnings on Nov. 6, is “expected to show a decline” of 16% in net income, “marking four declines in five quarters.” Meanwhile, adidas’ rivals are “taking steps to secure their share.” Nike, which “says it controls” 95% of the U.S. basketball shoe market, “plans to expand in sports gear for women” (BLOOMBERG NEWS, 9/26).

GENDER ROLES: The WALL STREET JOURNAL’s Sara Germano noted “the word ‘women’ was spoken 21 times” during Nike’s "roughly hour-long discussion" of its Q1 earnings, which jumped by 23%. That figure is “equal to the number of times that another favorite Nike word -- ‘innovation’ -- was spoken.” Thursday’s discussion of the women’s business “was second only” to the company’s Q4 ‘11 results, which had 25 mentions. Data from SportsOneSource shows that Nike “appears to be doing well selling sports apparel to women, with its year-to-date sales in the segment up 29%, compared with 15% growth at Under Armour and a 25% decline for Adidas.” Nike’s market share in the category stands at 31%, up from 27% last year and “growing faster than runner-up Under Armour, whose 14.5% share is a nudge higher than its 13.8% a year ago” (WSJ.com, 9/26).

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