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Adidas saw strong growth in Greater China in the third quarter, while sales in North America excluding Yeezy shoes were up on the year thanks to improving brand image, the company said on Tuesday.
Its performance in China contrasts with other companies that are struggling with weak consumer demand and a likely longer wait for government stimulus measures to boost confidence.
Currency-neutral quarterly sales rose 9% to 946 million euros ($1 billion) in Greater China, up from 870 million a year earlier, its strongest quarterly sales in China since the start of 2022.
“We are actually happy with the circumstances that you see in China, we are taking market share and we are more profitable both for us and the partners,” Adidas CEO Bjorn Gulden told journalists on a conference call, adding that he wouldn’t be surprised if sales grow by 10% or more in the fourth quarter.
Adidas opened more than 200 stores in smaller Chinese cities by the end of the third quarter and aims to get to 300 by the end of this year, competing with local brands on their turf, Gulden said.
Felix Dennl, analyst at Metzler in Frankfurt, told Reuters: “Adidas’ outperformance in China is down to underlying brand momentum, its local-for-local (or locally designed) approach and flexibility with respect to in-season development”.
Last week China’s biggest sports retailer Topsports (6110.HK) noted Adidas’ resilience and said Nike has by contrast been lagging, Dennl added.
Adidas shares were up 1.6%, despite a separate filing that top shareholder Groupe Bruxelles Lambert had cut its stake. Adidas had already released preliminary figures and hiked its annual sales and profit guidance earlier this month.
A trend for Adidas’ Samba and other “terrace” shoes – retro models inspired by soccer fans’ footwear in the 1970s and 80s – has helped it gain market share from rivals such as Nike and recover from a bruising break-up with rapper Kanye West, who goes by Ye.
LEGAL DISPUTES
Adidas reached a settlement with Ye during the third quarter to end a series of legal disputes.
The sale of parts of the remaining Yeezy inventory generated revenue of around 200 million euros in the quarter – well below Yeezy sales of around 350 million euros in the same quarter last year.
In North America, Adidas’ second-biggest market, currency-neutral sales were down 7% at 1.36 billion euros in the third quarter, but increased from the previous year when excluding Yeezy, the company said.
Gulden has overseen the sales of Adidas’ remaining stock of Yeezy shoes, initially in high demand but more recently selling at discounts.
Adidas’ wholesale business – revenue made by selling through third-party retailers – grew 13% in the third quarter, while direct to consumer sales grew 7%.
Adidas has taken shelf space from Nike at multi-brand retailers such as Foot Locker and JD Sports thanks to the trend for its multi-coloured sneakers, while its U.S. rival has seen sales fall.
Spending on the Olympic Games and Euros soccer championship drove Adidas’ overall marketing expenses up by 12% to 724 million euros in the quarter. As a percentage of sales, marketing and point-of-sale expenses were up 0.5 percentage points to 11.2%.
Adidas sales in China, on a quarterly basis, from Q1 2021 to Q3 2024
($1 = 0.9252 euros)
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