Adidas to pour more cash into marketing

Dhaka,  Wed,  20 September 2017
Published : 03 Aug 2017, 22:23:03

Adidas to pour more cash into marketing

BERLIN, Aug 3 (Reuters): Adidas will pour more cash into marketing to try to stay ahead in the race with US rivals Nike and Under Armour, the German sportswear firm said on Thursday as it reported another quarter of bumper sales growth.

Adidas will have an extra 700-800 million euros ($829-$948 million) to spend on marketing up to 2020 as sales grow fast, Chief Executive Kasper Rorsted said, pointing to a deal the company signed on Wednesday to extend its partnership with North America's Major League Soccer (MLS).  

Adidas, which had already announced preliminary second-quarter results and raised its 2017 guidance last week, said sales grew 28 per cent in China and 26 per cent in North America, though they fell 11 per cent in Russia.  

By contrast, Nike and Under Armour both reported flat North America sales in their latest quarters and said they would cut jobs to better compete.

Adidas shares, which hit a record high of 194.15 euros on Aug. 1, were down 0.5 per cent at 190.85 euros at 0927 GMT.  

Rorsted said Adidas was expanding its US base in Portland, Oregon - near where Nike has its headquarters - and noted the firm received more than 300,000 job applications in the country in the first half of 2017.

The Adidas retro basketball shoe Superstar was the top selling sneaker in the United States in 2016 and some analysts have expressed concern the German brand could suffer when that trend wanes.

But Rorsted said new fashion styles like the NMD, Tubular and EQT were more than offsetting slowing demand for Superstars and Stan Smith retro tennis shoes.

The NMD Runner and Tubular Shadow have joined the Superstar in the top 10 best-selling shoes in the United States, usually dominated by Nike, market intelligence firm NPD says.  

Adidas running shoes are also flying off the shelves, with Rorsted saying capacity constraints mean it has been unable to keep up with demand for its springy Boost sneakers, with sales of the UltraBoost model more than doubling in the quarter.  

Adidas still aims to keep marketing spending to about 13 per cent of sales in 2017, with the budget weighted to the second half of the year after it underinvested in the first, a spokeswoman said.
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