Analyzing Adidas’ Steady Decline In North America

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When thinking of the two main companies for sports, whether it may be footwear or kits, the names that immediately come to everyone’s mouths are Nike and Adidas. A good example of this is two of the biggest football/soccer clubs in Europe, Real Madrid and FC Barcelona. Madrid is sponsored by Adidas, while FC Barcelona is sponsored by Nike. Nike, as you would expect, has a healthy lead over its competitors, with the company’s appeal across the globe being unmatched. Unlike the past, however, Adidas’ sales are falling short. While the brand still holds second position in sportswear-making globally, the decrease in sales in the United States are holding the company back.

Adidas’ sales of athletic footwear and apparel have fallen 23% from a year ago to $1.1 billion. This revenue is only enough for the company to take third position in the United States, behind Nike and Under Armour. Nike is a mainstay, with sales reaching a magnificent $8.9 billion. However, Under Armour has made leaps and bounds to reach second place, with a 20% increase in the past year, to take the sales up to $1.2 billion. While Adidas still has a huge following in Europe, its failure to hold down the U.S. market is a problem, as Nike is making advancements in the European market. While Adidas’s footwear sales are still relatively good, they are sorely lacking in apparel sales, which Under Armour is succeeding in through sporting goods and athletic specialty retailers.

The importance of sales in the United States cannot be underestimated, as the world’s largest economy usually provides Adidas with a quarter of the company’s yearly revenue. One of the main problems with the company is that it is suffering from a “too-European” image, as many people do not think of Adidas when buying sporting items such as basketball shoes. The company’s ailing golf sales are also contributing to their losses. Adidas is targeting soccer to increase revenue in the United States. Despite the success in the summer’s World Cup, through the official World Cup Ball, the Brazuca, soccer is a sport which is still gaining popularity in North America Their competitors, Nike, have upped their game through increased sponsorship deals, including deals with Cristiano Ronaldo and Neymar. Adidas’ problems do not just end there. In basketball, their main sponsored star, Derrick Rose of the Chicago Bulls, has suffered from a string of injuries in the past two years. This has limited the positive influence expected through advertising from such a big name. Nike is said to control 95% of the American basketball market at this time. Adidas’s acquisition of Reebok back in 2006 was supposed to help the company compete with Nike, but the expensive purchase at $3.8 billion has not helped. Reebok has been in decline for quite some time now, and the brand has had to cut its sales forecast. After being replaced by Nike as the National Football League’s apparel supplier in 2012, the brand has tried to reposition itself as a fitness gear seller.

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6 Comments

  1. Steve Taylor October 2, 2014
  2. CTBlues October 2, 2014
    • Steven Taylor October 2, 2014
  3. Ivan October 2, 2014
    • Steve Taylor October 3, 2014
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