German brand adidas banks on sports as lifestyle to drive US sales

BERLIN — Adidas set a target on Tuesday for sales in North America to rise by almost half by 2020, predicting strong demand will continue for fashion sneakers after its retro Superstar was the top selling shoe in the US market in 2016.

The revival of the German brand has been hurting rivals Nike and Under Armour but some investors are concerned that adidas is too reliant on fickle trends such as the recent popularity of its Superstar and Stan Smith shoes.

Chief Executive Kasper Rorsted said the North American market is the “biggest challenge and the biggest opportunity” for adidas, targeting sales of €5 billion ($5.3 billion) by 2020, after a 24% jump to €3.4 billion in 2016.

Shares in adidas soared last week after the company increased sales and profit forecasts, targeting total sales of €25 billion to €27 billion by 2020. The stock was down 1.7% at 1330 GMT. Rorsted told an investor that day that the fashion- driven Originals business, which includes the retro brands such as Superstars, had grown 80% in North America in 2016.

Adidas running sales had climbed 40% last year in North America while sales US sports such as American football and basketball rose 25%.

Brand chief Eric Liedtke said he was comfortable with the balance, noting that a recent survey by market intelligence group NPD showed that two- thirds of sportswear is actually used for leisure rather than sport.

“It doesn’t mean we want to become a leisure brand. It just means we need to understand how the consumer is consuming the product,” Liedtke said.

Liedtke declined to comment on how many Superstar or Stan Smith shoes adidas sold in 2016 after it shifted 15 million and eight million pairs respectively in 2015.

But he said adidas had not seen any slowdown in a backlog of orders for Originals overall, and highlighted strong demand for new models such as Tubular Shadow sneakers, and Parley shoes made from recycled plastic waste collected from the ocean.

Liedtke said adidas had become better at managing launches of new shoes to generate hype, and adjusting its supply chain so that it could respond more quickly to demand for top sellers.

When the Tubular Shadow launched in November, adidas produced 250,000 pairs, which quickly sold out so it ramped up production to 1.1 million pairs within 60 days, Liedtke said, with three million due in six months and eight million in a year. —