By Ellen Emmerentze Jervell And Sara Germano
FÜRTH, Germany-- Adidas AG this week reported a surge in North
American sales that top executives on Thursday said shows the
German sportswear giant's troubled U.S. operations are finally
improving.
Investors and industry insiders remain wary.
Adidas's North American sales rose by a currency-adjusted 7% in
the quarter ended March 31, the company said Tuesday. The uptick in
the world's biggest and most influential sports market came after
Adidas significantly reworked its approach to the U.S. last
year.
"Numbers don't lie," said Chief Executive Herbert Hainer at the
company's annual general meeting here Thursday. "We are seeing the
first successes. I think what we're doing is right."
For months, Adidas has been telling analysts that internal
changes, including shifting top management and design resources to
its North American headquarters in Portland, Oregon, would bring
growth beginning early this year. It also said its margins in the
region would be helped by a shift toward American sports, rather
than soccer, and the launch of more America-targeted marketing
campaigns.
"It's too early to see the first results of the 'Americanization
strategy,'" said Cédric Rossi, an analyst at Bryan Garnier in
Brussels. Adidas's North American sales growth, he said, was only
"satisfactory" because Adidas reported "very weak numbers" in the
region last year.
Adidas's position in the U.S. market has eroded in recent years.
American consumers have seen the brand as off-mark, with the wrong
products. Adidas last year fell to third place behind industry
newcomer Under Armour Inc. and longtime rival Nike Inc. in U.S.
retail sales of sports apparel and footwear, according to analysts
Sterne Agee and SportScanInfo. Earlier this year, Adidas's North
American president, Mark King, said the brand "in a very short
time" would improve its cool factor.
At the annual meeting, Adidas's investors restrained their
excitement.
Marco Scherer, a representative of Adidas shareholder Deutsche
Asset Management, said the first quarterly results looked like "a
good start," but asked whether Adidas could prove it wasn't "only
running behind its competitors" in the North American market.
"Nothing takes as long as regaining trust," said Daniela
Bergdolt, a lawyer at DSW, another company shareholder. Making
Adidas attractive again in the U.S. will be "very expensive," she
said.
Adidas's North American growth also came amid broader growth in
the American sporting-goods market. Under Armour said its North
American sales rose 20% in the first quarter and Nike said sales
rose 6%.
Market-researcher Euromonitor said the U.S. sportswear market is
expected to grow to $96.2 billion in 2015, up 6.6% from last
year--and despite the fact that one in four Americans didn't
exercise at all last year, according to a recent survey by the
Physical Activity Council. Euromonitor hypothesized that so-called
athleisure attire is reshaping the retail industry, with the
boundary between fashion and sports "getting blurrier month by
month."
Despite its reported positive revenue development, Adidas still
lags behind the broader sportswear industry in terms of growth so
far this year, said Neil Schwartz, vice president of business
development for SportsOneSource. Overall, the U.S. retail sports
footwear industry has grown 7% in unit-sales volume and 6% in
dollars so far this year, according to the firm.
Driving that growth in the U.S. are sales of lower-priced
fashion-athletic shoes, Mr. Schwartz said, a category that hasn't
been Adidas's strength. Adidas said it is already working to
correct that, and plans to roll out two new lines of running shoes
priced under $100 within the next year.
Reebok, acquired by Adidas in 2006 for EUR3 billion ($3.4
billion), reported its eighth consecutive quarter of growth after
many years of decline. The brand reported 9% sales growth during
the first quarter.
Mr. Rossi, the Bryan Garnier analyst, said the impact of
Adidas's recent moves in North America would only become evident in
the second half of this year. Adidas's current U.S. strategy "is
the right one," he said.
Matt Powell, an industry analyst at NPD Group, predicted "an
improving climate" for the company in the U.S.
Write to Ellen Emmerentze Jervell at ellen.jervell@wsj.com and
Sara Germano at sara.germano@wsj.com
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