ADS Adidas AG

By Ellen Emmerentze Jervell 

HERZOGENAURACH, Germany-- Adidas AG on Saturday plans to lift its street cred by releasing the third version of its popular Yeezy Boost shoe with rapper Kanye West.

The launch also banks on something the beleaguered sports company can market without hip-hop stars: geeky German engineering.

Adidas has struggled for years to regain its cool status, particularly in the U.S. Its design and marketing cooperation with Kanye West, begun this year, has helped somewhat, analysts and sneaker fans say.

To boost the new shoe's air of exclusivity and draw attention, Adidas is deliberately releasing far fewer of the model than the market seems to want. At some footwear stores around the world, eager shoppers have camped out for days.

Adidas hopes the tactic will add allure to the rest of its product line.

"Only a very limited number of people who want the new shoes will be able to get them," an Adidas spokeswoman said. "But they might buy other Adidas pairs."

Online magazine sneakernews.com on Tuesday published an article titled "11 Adidas shoes you can buy instead of the Yeezy Boost."

The buzz is a welcome change for Adidas, which repeatedly cut its profit outlook in 2014 amid sagging demand. It has lost market share for years to U.S. rival Nike Inc. and more recently to newcomer Under Armour Inc.

While Boost shoes may provide "a weapon for Adidas's resurgence," they are just one element of a bigger turnaround, said Robert C. Walcott, a professor of entrepreneurship and innovation at Northwestern University's Kellogg School of Management in Chicago.

One reason the Boost shoes have sparked optimism for Adidas is that it isn't marketing them on trendiness alone. Boost soles use a proprietary plastic from German chemicals giant BASF SE that the companies say provides demonstrably superior athletic performance.

"It is a unique and credible technology," said Matt Powell, a sports industry analyst at NPD Group.

BASF in 2009 approached Adidas with the new plastic and the sportswear firm was "quick to come up with ideas," said Martin Vallo, BASF's account manager for Adidas.

Gerd Manz, senior innovation director at Adidas, recalled that when he first measured the performance of soles made from the plastic, his "blood pressure rose."

Pounding the material to simulate running and jumping, he saw that it released far more of the energy input than any other sole material he knew of. The result could be higher leaps and springier strides.

"I got that we were onto something," he said.

The innovation prompted a debate inside Adidas over how to market the material, which resembles a bubbly version of polystyrene used in coffee cups and looks "very different" from other sneaker soles, Mr. Manz said.

Adidas eventually decided to play up its new plastic. For its first use, the Energy Boost running shoe, Adidas added "Boost" to the name and left the distinctive material exposed. At the launch in February 2013, Adidas executives focused on the foam's energy return and cushioning abilities.

Marketing shoes' materials and performance marks a return to tactics of Adidas's glory days. Company founder Adi Dassler already in the 1930s was known for his close cooperation with athletes to create functional products, a rarity at the time.

Adidas struggled with its approach in the 1980s when Nike started appealing to consumers' emotions with shoe monikers like "Air" and, more recently, "Free." The German company, focused on soccer and engineering, struggled to connect emotionally with American consumers, industry officials said.

Boost allows Adidas to play to its technical strength amid renewed consumer interest in performance and product quality, company officials say.

"Materials and functionality have always been at the core of what we do, " said Maarten Teijsee, vice president Adidas head office.

Industry experts said Adidas's retro approach is particularly relevant to athletes focused on performance.

"Runners do care about what kind of plastic is under their shoes," said Sven Reinecke, executive director of University of St. Gallen's marketing institute in Switzerland. Mr. Reinecke said Adidas is using Boost to differentiate its offerings from competitors'. Adidas plans to double its running shoe sales by 2020.

Adidas got lucky in late 2013 when Mr. West quit his endorsement deal with Nike for the German company and began appearing in public wearing Boost shoes. The rapper, sometimes nicknamed Yeezy, gave the high-performance running shoes mass appeal.

American pop culture magazine Complex last year named the Pure Boost, one of Mr. West's favorite models, "the best sneaker of 2014."

Mr. West launched his first clothing and sneaker collection for Adidas's Originals unit with a fashion show in New York in February. He has since launched two different Yeezy Boost sneakers, the first revealed through a carefully planned social media leak.

Mr. Powell said Boost already has helped prop up some of Adidas's weaker businesses in the U.S. Now, he added, the company is using Mr. West to introduce the material to a broader audience.

Erik Fagerlund, co-founder of sneaker retailer Sneakersnstuff, which also plans to sell a limited number of Yeezy Boost shoes online and at its stores on Saturday, said Adidas's Boost soles are recognized by knowledgeable consumers and give the collaboration more credibility.

"Today it is not hard to create shoes," he said. "But to create functional sneakers is not as easy."

In 2013, Adidas sold 1.5 million pairs of Boost shoes. Since then it has used the material in footwear for basketball, baseball, snowboarding, skateboarding and golf. The company said it hopes to sell 12 million Boost pairs this year, in part thanks to Mr. West.

Christopher Alessi

contributed to this article.

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(END) Dow Jones Newswires

August 20, 2015 11:59 ET (15:59 GMT)

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