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After Breaking Up with Kanye, Adidas Surges 120% to Haunt Nike’s Dreams

By Stocks News   |   Nov 5, 2024 at 02:44 PM EST   |   Stock Market News
After Breaking Up with Kanye, Adidas Surges 120% to Haunt Nike’s Dreams

Just two years ago, Adidas was in full-on SOS mode, patching up the mess left by their Kanye West divorce. (Let’s be honest, Kanye’s whole vibe is just attention-seeking, right? But hey, what do I know.) Remember those Yeezy shoes? The ones that looked like someone left marshmallows too close to a campfire? Or, you know, the “I’m definitely from a galaxy far, far away” look?

Yeah, well, Adidas had to kiss that $1.3 billion gravy train goodbye. Dark days. But here we are now, and Adidas is out here marching around like it never even missed a beat, with a new CEO and a fresh set of kicks that are leaving Nike’s stock looking like it’s wearing cement boots (All without Kanye’s bizarre foot furniture).

Since the Kanye split, Adidas stock has skyrocketed 120%. Not bad for a brand that once thought shoes that looked like they’d melted were a good look. And it’s not just the stock that’s glowing up: Adidas’ third-quarter profits went from $430 million to $650 million, and their gross margin is poppin at 51.3%—way above Nike’s 45.4%. This year, Adidas is eyeing $1.3 billion in profits. Turns out, they don’t need Kanye’s “vision” to sell shoes, or at least, ones you can wear without someone asking if your feet are okay.

 

So how did Adidas turn things around? For one thing, they’ve tapped into the retro craze, bringing back classics like the Gazelle, Samba, and Spezial. These aren’t your foam-footed Yeezys; these are shoes that actually look like shoes (imagine that). Gen Z is eating it up, especially in places like Japan and South Korea, where sales jumped a whopping 18% last quarter. Almost every region is posting double-digit growth. (North America’s still got a Yeezy hangover, but hey, can’t win ’em all.)

Then there’s new CEO Bjørn Gulden, who joined Adidas from Puma and clearly knows a thing or two about turning a brand around. He’s all in on performance shoes, with over 10% growth there, and he’s reversed Adidas’ former strategy by bringing their products back to independent retail shops instead of focusing mainly on direct sales. This gives Adidas way more visibility, especially now that they’re no longer hiding behind shoes that look like rubber Swiss cheese.

On the flip side, Nike’s stock is down over 10% this year, and for good reason. They reported a 4% revenue drop in North America, while Adidas is enjoying double-digit growth. With gross margins slipping to 45.4%, it’s like Nike is trying to sprint but keeps stepping on its own shoelaces.

They’re also investing in future-forward tech, including 3D-printed shoes that we assume won’t resemble alien foot armor. Their marketing spend is up, too, keeping Adidas top of mind as they carve a path toward a new identity — a future with high-tech sneakers that look just as good as they perform.

And let’s not forget about all those unsold Yeezys. Some folks thought Adidas would destroy the unsold stock, but Gulden decided to sell it off and put some of the proceeds toward charity. So, while Kanye might be off in his own world, Adidas has settled any lingering legal dust with him and moved on — no Yeezy leftovers holding them back.

Adidas has thrown together quite the comeback and it’s doing it in style (with shoes that won’t make you look like a Jedi extra). I’m sure right now Kanye is wondering if there’s a seat for him back at Adidas HQ.

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Stock.News has a position in Nike mentioned in article.

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