The new boss of Adidas increased sales and profit targets yesterday, sending shares in the German sportswear firm to a record high as he pledged to keep investing heavily in the key US market and do more to boost e-commerce sales.
The more ambitious targets will maintain a squeeze on US rivals Nike and Under Armour, which have both been losing sales to the German brand in their home market, where Adidas’s retro Superstar was the top-selling shoe last year.
“We are still in catch-up mode in North America,” chief executive Kasper Rorsted said, noting that the US accounted for a third of global sportswear sales but was the only market where Adidas lagged behind Nike significantly.
Rorsted, the Danish former head of consumer goods firm Henkel, replaced long-serving boss Herbert Hainer in October with a mandate to improve profitability after activist shareholders took stakes in Adidas in 2015 as the German firm fell further behind Nike in the United States.
Even before Rorsted took over, Adidas had made significant strides, lifting marketing spending and shaking up its US business, helping its shares rise two-thirds in the past 12 months even though its profitability still trails that of Nike.
Adidas shares, which are now trading at a big premium to Nike, jumped 7% to hit a new record high, headed for their best day since November 2015.
“The mid-term guidance clearly implies that the new management anticipates a multi-year growth path, taking share from most peers,” Equinet analyst Mark Josefson, who raised his recommendation on the stock to “buy” from “neutral”, said.
Adidas more than doubled its share of the US athletic footwear market to 10% in January, but remained far behind Nike on 45%, according to market data firm NPD.
Rorsted said Adidas had been unable to keep up with demand for its springy-soled Boost shoes made popular by singer Kanye West, adding that it would take 12 to 18 months for partner BASF to increase capacity so it could supply more soles.
Rorsted said Adidas would keep investing heavily in the United States, including in staff, infrastructure, marketing and store fittings, noting that retailers such as Foot Locker and Dicks Sporting Goods were positive about the brand’s future.
German rival Puma has also been enjoying a revival in the US market, helped by a shift towards retro styles and away from basketball shoes which has hurt Under Armour and dampened Nike’s success.
Rorsted said he wanted to focus even more strongly on the Adidas and Reebok brands in future, announcing plans to sell the ice hockey brand in addition to its golf business, which has been on the block since last May but has yet to find a buyer.