Adidas vows to outrun Nike in US with Bouncier shoes

Adidas AG used to tell athletes that “impossible is nothing.” The company is taking that advice to heart with a vow to come from the back of the field — sixth place — and overtake rival Nike Inc as the U.S. leader in running shoes.

With its new $150 Energy Boost shoe that promises users more bounce while expending less energy, Adidas plans to win over the growing legions of runners in the $15 billion industry and drive sales in the U.S., the world’s biggest running shoe market, where it has struggled for years. Adidas-branded clothing is displayed on man- nequins at the Adidas AG outlet store in Herzogenaurach, Germany. “We believe Boost is a game-changing product,” said Herbert Hainer, chief executive officer of Adidas AG on March 7, at the company’s annual results press conference. “We have the biggest potential in running, and that’s where we are focusing our efforts.”

The shoemaker is so bullish on what it calls Boost’s revolutionary sole that it has pledged to sell 1 million pairs of the shoe this year. Within five years it aims to overtake Nike, a company founded on running shoes, in its home country. That’s like Nike vowing to sell more soccer cleats in Germany, where Adidas rules the sport with sponsorships of the national team and the Bayern Munich professional club.

The goal “is a steep hill to climb,” said Matt Powell, an analyst for market researcher SportsOneSource. “Of all the categories in footwear, it’s the most crowded. It’s hard to get a big chunk of that business after Nike.” While Adidas, the world’s largest soccer brand, has been selling running shoes for decades, it hasn’t managed to capture the devotion of Americans with shoes some critics have called stiffer and clunkier than Nike’s. The “big difference” between the two companies is the U.S. market, Adidas Chief Executive Officer Herbert Hainer told Bloomberg Television last week. In the rest of the world, he said, it’s a head-tohead race.

Though Adidas is the No. 2 global seller of athletic footwear after Nike, its flagship brand accounts for 4.4 percent of running shoes in the U.S., according to SportsOneSource. That’s good for sixth place. Nike has 54 percent, and smaller companies such as Asics Corp. (7936), Brooks Sports Inc. and New Balance Athletic Shoe Inc. all lead Adidas in the U.S.

Adidas sees the push in running as a way to jumpstart its business in the U.S., where soccer trails running. This is even more critical after Reebok, which it acquired for $3.8 billion in 2006, has disappointed. Adidas wrote down the value of Reebok and other goodwill by 265 million euros last week after re- evaluating its growth prospects. Nike trades at 21 times estimated earnings, versus 17 times for Adidas, though the German company is catching up. Adidas shares have risen 32 percent in the past year versus 1.4 percent for Nike. Running is worth almost twice as much as soccer globally, driven by hardcore marathoners and sprinters as well as newbies entering their first Turkey Trot and fashionistas buying Nike Frees in neon for everyday wear. That could leave running as Adidas’ best chance to meet its goal of lifting revenue 14 percent, to 17 billion euros, in the three years to 2015.