Adidas Beats Nike

Adidas AG is beating Nike,Inc. on Wall Street. Over the last twelve months, Adidas shares are up 56.50%, while Nike shares are up 33.66%.

What’s behind Adidas lead on Wall Street? Earnings and sales momentum.

For 2019, the German sportswear maker reported record earnings and revenues, driven by strong gains across all market segments. Especially in emerging markets, up 14%, Russia/CIS, up 3%, and North America, up 10%, and in Greater China, up 11%.

Adidas vs Nike Shares on Wall Street — koyfin_20200109_072800102KOYFIN

While Nike is still the industry leader in terms of sales, Adidas is the most profitable, with a gross profit margin close to 52.08%, compared to 44.70% for Nike.

Adidas’ strong financial performance has been driven by several factors, like the accumulation of a broad portfolio of brands, which include Adidas, Reebok, and Runtastic.

Then there’s innovation, popularity, and digital shopping experience, according to Jesse Cohen, analyst at financial markets platform Investing.com. “Ongoing product innovation, popularity of athleisure among millennials and a great digital experience shopping through its SNKRS app makes Nike a good bet going forward,” he says.

“With that being said, while Nike is the true leader in its field, Adidas seems to be closing the gap.”

And there are well-targeted marketing campaigns with messages that appeal to the younger generations of consumers — like the second phase of the She Breaks Barriers initiative, launched last spring.

The campaign is debuting a film that promotes equal media representation for women in sport. Also, it’s announcing the @3StripeLive series to livestream girl’s high school volleyball and soccer games on Twitter.

Targeting younger consumers help Adidas create instant sales cascades for new products.

Like the cascade for NMD R1, which sold 400,000 pairs on launch day alone, and the cascade for Ultraboost, which sold 11,000 pairs in the first hour.

Adding to the marketing buzz for new products are the innovative ways Adidas makes its products, which have helped the company make it to the Dow Jones Sustainability indexes for the 20th year.

One of these products is the FUTURECRAFT.LOOP, a 100% recyclable performance running shoe that can be returned to Adidas, broken down and reused in the production of new shoes.

Then there’s Adidas Yoga Collection, which is produced with recycled ocean plastic. And the AlphaEdge 4D sneakers, which are produced with the use of light and oxygen through a process called Digital Light Synthesis.

But there’s one more factor that spins and magnifies buzz for Adidas’s products. High profile collaborations and partnerships with celebrities and companies such as Pharell Williams, Run DMC, Kanye West, Bape, and Beyonce.

To be fair, Nike has been pursuing similar campaigns, having its own following among younger consumers. But, at this point, Adidas seems to be gaining the upper hand around the globe.