A few years back, Adidas looked unstoppable. The German company’s footwear business was booming on sales of its retro Superstar and Stan Smith sneakers. New styles such as the NMD were helping to keep the Boost cushioning it introduced in 2013 hot. And its Yeezy line, designed in collaboration with rapper Kanye West, had sneakerheads in a frenzy.
The situation looks different today. The company has scaled back its distribution of Superstars and Stan Smiths. Its top Boost style, called UltraBoost, is an update of the 2015 original. And after Adidas’ biggest Yeezy launch ever last year, the franchise didn’t grow at all this quarter. Adidas planned it that way, but without that help, the company’s footwear sales only eked out a 1% rise in the third quarter.
Now the question facing Adidas is whether it can reignite growth in its sneaker business.
While the company’s stock price dipped on the new earnings, CEO Kasper Rorsted tried to dispel any concerns about its footwear sales on a call with analysts and investors today (Nov. 6). “Right now we don’t believe we have an issue in this area,” he said. Boost is now a $2.5 billion business and still growing, he said, including double-digit percentage growth for UltraBoost. Adidas also saw success with launches in its more casual Originals line. The Ozweego, a chunky sneaker from the 1990s Adidas reintroduced, has been picking up momentum, he said, and Adidas has released its retro-inspired Continental 80 in a variety of color schemes.
The company expects footwear sales to start growing faster in the next quarter and into next year. Rorsted emphasized the company’s line with Beyoncé is launching soon, and it has other new products in the pipeline, undoubtedly including more Yeezy styles, though he didn’t reveal anything major. Next year is also the 50th anniversary of the Superstar, he said.
But it’s not entirely clear if or how the company will get shoppers as excited for its products as they once were. It doesn’t have a new hit sneaker in sight, and its Boost line is already six years old. Nike, its main rival, is drawing notice for its performance innovations, and its sneaker business is growing with new styles such as the Air Max 270 and the 270 React.
Adidas’s total sales still grew 9% in the quarter, with strong results in North America and a return to growth in Europe, where the company had lately struggled.
“Adidas is doing a nice job, not a great job, while others are doing better from a product and consumer engagement standpoint,” Christopher Svezia, footwear and apparel analyst at Wedbush Securities, told the Wall Street Journal. “They’ve got to come up with something more exciting.”
Matt Powell, the sports industry analyst for NPD Group, which tracks most of the US wholesale market, said in a blog post Adidas’s sales “have been challenged all year and the inability to offset last year’s Yeezy releases won’t help this year’s holiday performance.”
Adidas is a company that prides itself on innovation and may indeed have a new trick up its sleeve. If it does, it’s time to use it.