- Adidas posted strong 2018 earnings on Wednesday, but it had a few warnings for this year.
- Some popular sneaker styles, like the Stan Smith and the Superstar, have fallen out of favour, CEO Kasper Rorsted said during a press conference.
- Sales of the shoes fell by $US565 million from 2017 to 2018, and Adidas said it would focus on its Kanye West collaboration, Yeezy.
- Adidas also said it wouldn’t be able to meet strong demand for mid-priced apparel because of supplier constraints.
Adidas is predicting a bit of a stumble in 2019.
The company posted strong 2018 earnings on Wednesday, with sales up 17% for the brand in North America and 8% globally on a currency-neutral basis.
But CEO Kasper Rorsted issued a few warnings and changes in Adidas’ strategy for the coming year.
Some popular sneaker styles, like the Stan Smith and the Superstar, have fallen out of favour, he said in a press conference. Sales of those shoes fell by $US565 million from 2017 to 2018.
“The life cycle goes up, and the life cycle goes down,” Rorsted said. “This has been the case for the Stan Smith and Superstar since they were founded.
“We do manage the trend up and manage the trend down,” he said.
The Stan Smith and the Superstar were both hot for years, but their sheen has faded even as Adidas has become more popular in the US. In 2016, the Superstar was the top-selling sneaker in the US in terms of dollar sales, according to The NPD Group.
Signs that the Stan Smith and the Superstar would not stay popular for long appeared in 2017, when Foot Locker CEO Dick Johnson told analysts in an earnings call that the shoes had approached their peak.
“I think it’s the cycle slowing down,” he said. “Superstars and Stan Smiths have been around a long time, and they have waves that they come through.”
Johnson said the sneakers were still selling, just not as quickly as they did in 2016, when it seemed that “every teenage female, potentially in the world, needed to have a pair.”
It seems the trend is almost over, but Adidas is still seeing growth in important markets like the US, Rorsted said. Part of that is from the growth of relatively new franchises like Ultraboost, which Rorsted said is now worth more than $US1 billion for Adidas, as well as managing and reintroducing other classic, retro shoes like the Yung.
Adidas is also continuing to evolve its strategy for its Kanye West collaboration, Yeezy, Rorsted said.
“In a normal year, we’ll have between 20 and 30 launches of Yeezy products,” he said. “Three years ago, we did two or three.”
Some of these new sneakers won’t be as limited a release as Yeezy shoes have traditionally been.
“We changed the model, but it does not change the fact that we will make very scarce launches for certain shoes, and sometimes we’ll suddenly have a different shoe,” Rorsted said.
Adidas also said in its earnings report that a supplier issue related to apparel would cause the company to miss some opportunity in moderately priced apparel and drag down growth for 2019.
Adidas said it expected to see 5% to 8% growth on a currency-neutral basis for 2019.