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Back-To-School Shopping Data Sings A Familiar Refrain: Adidas Is Up, Nike Is Down

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Back-To-School Shopping Data Sings A Familiar Refrain: Adidas Is Up, Nike Is Down
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The latest back-to-school data is echoing the sentiment that has been well covered in the sportswear world over the past year; adidas AG (ADR) (OTC: ADDYY) is up and Nike Inc (NYSE: NKE) is down.

Fresh off overtaking the Jordan brand as the No. 2 footwear brand in the U.S., Adidas increased sales a remarkable 12.3 percent year over year just over the last four weeks. The younger generation has played a key role in its comeback, so its no surprise the brand is performing well in the back-to-school period.

“Adidas is really customer-centric, they are making products that the kids want to buy,” sports industry analyst Matt Powell told Benzinga.

Powell has previously stated that this back-to-school season was the most promotional in his two decades covering the business, but Adidas appeared to make the most of it. The same cannot be said for Nike or Under Armour Inc (NYSE: UAA).

Under Armour footwear declined 14.8 percent year over year (also over the last four weeks) driven by a massive decline in the basketball segment, which alone has seen a 61.2 percent drop year over year.

Nike saw a 4.1 percent year-over-year decrease over the same time, with running losing 10.5 percent and basketball down 8.4 percent. Nike’s usual go-to styles like the Roshe and Jordan are not performing strong enough to “back-fill revenue shortfalls” said Bank of America analyst Robert Ohmes.

While Nike’s Vapormax has been dubbed as the brand's answer to Adidas' Boost technology, Google Trends imply that Boost is outperforming Vapormax, as the latter has yet to contribute meaningfully to overall sales, failing to crack the 250 styles.

With Nike’s first-quarter earnings in the balance, Ohmes believes Nike will deliver an earnings beat given expense cutting initiatives but believes the brand will lower revenue guidance on its fiscal year 2020 $50 billion target, closer to Bank Of America’s $40.5 billion mark.

The analyst believes Nike’s fiscal year 2018 outlook depends on significant re-acceleration of e-commerce sales, although that could prove difficult, as the brand's e-commerce channel has become a “dumping ground” for discounting and clearance of footwear and apparel for retailers and brands.

Bank of America maintains an Underperform rating on Nike with a $42 price target.

Related Links:

Adidas Jumps Over Jordan Brand To Take The No. 2 Spot In Sports Footwear

'Panic' May Be Setting In Among Nike Investors

________ Image Credit: Used with permission.

Latest Ratings for ADDYY

DateFirmActionFromTo
Nov 2017BairdMaintainsNeutral
Nov 2017Wells FargoInitiates Coverage OnOutperform
Sep 2012

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