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Marketing and Sponsorship

Adidas Pledges To Keep Investing In U.S. Market, Keeping Heat On Nike, Under Armour

Adidas CEO Kasper Rorsted yesterday "increased sales and profit targets" for the German sportswear brand, sending company shares on the Frankfurt Stock Exchange to a "record high as he pledged to keep investing heavily in the key U.S. market and do more to boost e-commerce sales," according to Emma Thomasson of REUTERS. The "ambitious targets will maintain a squeeze" on rivals Nike and Under Armour, which have both been "losing sales" to Adidas in the U.S. But Rorsted noted, "We are still in catch-up mode in North America" (REUTERS, 3/8). YAHOO FINANCE's Daniel Roberts noted in the U.S. athletic footwear market, Adidas "rose to nearly 8% market share, gaining on Nike’s 40.8% and distancing itself from Under Armour’s 2.8%." The company’s "stunning success in the sneaker market is a turnaround after an ugly few years" (FINANCE.YAHOO.com, 3/8). THE STREET's Brian Sozzi wrote under the header, "Adidas Should Scare The Heck Out Of Under Armour And Nike Right Now" (THESTREET.com, 3/8). The WALL STREET JOURNAL's Stephen Wilmot wrote Adidas now has "considerable scope to improve its margins, which are roughly half those of Nike's" (WSJ.com, 3/8).

CHOOSE WISELY: BLOOMBERG NEWS' Weiss & Mulier note Rorsted is "doubling down on surging sales of casual sneaker lines like Stan Smith and Tubular to transform the German sportswear maker into a fast-fashion business." Adidas said that sales of so-called lifestyle products from the Originals, Neo and Y3 lines rose 45% in '16, "more than triple the pace of performance sports gear." The company also said that profit should rise 20-22% a year on average through '20, "compared with a previous projection for growth" of about 15% (BLOOMBERG NEWS, 3/8). Rorsted said that the "improved profitability would come from selling more full-priced products and improvements to the supply chain, as well as foreign-exchange benefits." Adidas said that it would continue to "sharpen its focus on the Adidas and Reebok brands and whittle away at noncore operations." The WALL STREET JOURNAL's Germano & Divac note the company is now "seeking a buyer for its ice-hockey brand CCM Hockey." Adidas said that the "sales process for the golf brands TaylorMade, Adams Golf and Ashworth, is on track" (WALL STREET JOURNAL, 3/9). 

PRESIDENT PROBLEMS: Rorsted in an interview with CNBC's Sara Eisen was asked, "Do you worry at all with the new Trump administration that an 'America first' policy would put you at a competitive disadvantage being a German company that's trying to sell to American customers?" Rorsted: "No, I don't think that's going to be relevant. The entire sporting goods industry is sourcing its products from Asia so if tariffs will come, it will hit the entire industry" ("Squawk on the Street," CNBC, 3/8).

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