The success of Adidas’ (ADSGn.DE), opens new tab low-rise multi-coloured Samba and Gazelle sneakers, along with weaker sales at rival Nike, should help the German sportswear brand deliver strong second-quarter sales and its biggest profit margin in three years.
Nike (NKE.N), opens new tab forecast a surprise drop in annual sales at the end of June, adding to investor worries about the sportswear giant falling behind established peers and newer rivals alike.
Nike shares fell as much as 20% on the news, but shares in Adidas – which usually track the U.S. company’s moves – barely reacted, suggesting investors see Nike’s weakness as an opportunity for Adidas.
“Nike, in terms of product and message, is very much off its game and Adidas is having a bit of a moment,” said Simon Irwin, retail and sporting goods analyst at Tanyard Advisory.
Nike is less innovative than in the past and competition has increased, providing retailers with a wider range of brands to choose from, said Cedric Rossi, next-gen consumer analyst at Bryan Garnier.
“There is really a huge contrast between what’s going on at Nike and the rest of the industry,” he added.
Nike said in late June it would roll out new $100-and-under sneakers around the world as it aims to get sales back on track.
Meanwhile, Adidas has been fuelling a trend for its three-striped shoes like the Samba and Gazelle, bringing out new colours and limited editions to keep shoppers interested.
Online searches for “Adidas Samba” have surged worldwide in the past twelve months, surpassing searches for “Nike Air Force 1” last December and hitting a peak at the beginning of April, Google Trends data shows.
Analysts expect Adidas to report a profit margin of 51.4% for the second quarter, according to LSEG data. That would be its highest in three years. Quarterly revenue is tipped to rise 4.5% from a year earlier to 5.6 billion euros ($6.1 billion).