Nike's Struggles Highlight Adidas' Market Gains In Q2: Report

Zinger Key Points
  • Adidas expected to post highest profit margin in three years.

Adidas AG ADDYY is reportedly expected to post impressive second-quarter sales and its highest profit margin in three years, driven by the success of its low-rise, multi-colored Samba and Gazelle sneakers.

In contrast, Nike Inc NKE is facing a forecasted decline in annual sales, causing investor concerns about its market position relative to its competitors.

Though Nike’s shares dropped following the weak forecast, Adidas’ shares remained stable, reflecting investor optimism about Adidas’ growth potential, Reuters reported.

The report cited analyst Simon Irwin from Tanyard Advisory, who stated, “Nike, in terms of product and message, is very much off its game and Adidas is having a bit of a moment.”

Nike plans to launch affordable sneakers globally to regain its market momentum. Meanwhile, Adidas continues to captivate consumers with new colors and limited editions of its iconic Samba and Gazelle shoes.

Google Trends data reveals a significant rise in online searches for “Adidas Samba,” surpassing “Nike Air Force 1” searches in recent months, the report highlighted.

Also Read: Adidas Bribery Allegations Lead To Staff Exits In China

Analysts predict that Adidas will achieve a profit margin of 51.4% in the second quarter, its highest in three years, with a 4.5% increase in quarterly revenue to 5.6 billion euros ($6.1 billion), per the report.

However, the analysts cautioned against assuming a return to “golden days of very high margins” due to weak demand in China and heightened competition.

Despite its success, Adidas faces competition from emerging brands like Hoka, Lululemon Athletica Inc LULU, New Balance, and On Running, which collectively held a 35% global market share in 2023.

Irwin noted that Nike’s strategy to focus on direct-to-consumer sales has allowed smaller brands to gain market share, contrasting with Adidas’ efforts to strengthen ties with wholesalers under CEO Bjorn Gulden.

Wall Street analysts suggest a potential management shake-up at Nike ahead of its investor day this fall. Additionally, the upcoming Euros soccer championship is expected to boost demand for sportswear in Europe, the report added.

Price Action: ADDYY shares closed lower by 1.17% at $117.14 on Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image via Shutterstock

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