COMPANY PROFILE

Adidas AG, designs, develops, produces, and markets athletic and sports lifestyle products worldwide. The company operates in 10 segments: Europe, North America Adidas, North America Reebok, Asia-Pacific, Latin America, Emerging Markets, Russia/CIS, Adidas Golf, Runtastic, and Other Centrally Managed Businesses. It offers footwear; apparel; and hardware, such as bags, balls, fitness equipment, golf clubs, and hockey sticks under the adidas, Reebok, and adidas Golf brands. The company is also involved in the operation of Runtastic, a digital health and fitness space; and Y-3 label business activities. It sells its products through approximately 2,300 own-retail stores; 14,000 mono-branded franchise stores; and 150,000 wholesale doors, as well as its e-commerce Website. adidas AG has a strategic partnership with Foot Locker, Inc. The company was formerly known as adidas-Salomon AG and changed its name to adidas AG in June 2006. adidas AG was founded in 1920 and is headquartered in Herzogenaurach, Germany.

Recent Earnings

I’ll post my update post earnings. Heres an awesome update from Adidas on their new strategic focus called “Own the Game”

https://www.adidas-group.com/en/strategy/summary/#/Agenda/

Opinion

Adidas has gotten the message from Nike, focus on DTC (direct to consumer) and ditch the wholesale partners that don’t deliver with sales and do not present the brand in the light it should be placed. There’s massive opportunity as the economy opens up and Adidas benefits from many of the same factors as Nike did when it began the DTC approach. Adidas is much cheaper and is just as strong a global brands so while I love Nike too, I think a Adidas shareholder could see a better 12 month return given its been a big laggard. It’s hard to mention Adidas without comparing this great brand to Nike. Adidas has plenty of upside if they can penetrate the U.S. market in a more meaningful way. Adidas has made an aggressive push into America and has signed popular athletes like Trevor Lawrence and Patrick Mahomes that should help build deeper ties with Americans. There’s some real irony here, Adidas is the Nike of Europe given it’s headquarters in Germany. Adidas had a largely male audience and has really beefed up its focus on the female market. Sports apparel is still 50% female so Nike may be the leader by a mile but Adidas probably has more to gain going forward if they get it right. Athleisure is just as much about the fashion angle as it is with technical innovation. I think Adidas in many cases has more fashion appeal than Nike but Nike clearly has more technical appeal for now. Adidas has approached gaining brand appeal with a more edgy angle and frankly I like it. Adidas made a smart decision to manufacture in China for China. That could give them a brand and manufacturing advantage if U.S./China relations continue to deteriorate. Adidas is in the portfolio for many reasons, not the least of which is its ability to benefit from anti-U.S. brand rhetoric as the trade war rages on.