Few at Adidas could have predicted that the sneakers, whose original model was launched for the 1950 World Cup, would end up being their most modern and groundbreaking collaboration, filling the void left by the brand. But the way of fashion is like that. The brand with the three stripes is managing to leave Yeezy and its lucrative collaboration with rapper Kanye West – now known as Ye – behind, thanks to the phasing out of its remaining stock and, above all, the appeal of its original models like the Samba. Although profits are shrinking, loss forecasts of up to 700 million at the start of the year are a thing of the past and the German company is managing to convince markets that it has emerged from the doldrums.
In the first nine months of this year, the footwear and sporting goods company made a profit of 304 million euros, 72% less than in the same period in 2022. Although they reflect an obvious slowdown in its business, they are better than expected. Expected: The company has managed to increase its margin and reduce the inventory that has burdened it in recent months. In the earnings statement presented in early November, CEO Bjørn Gulden – who signed from Puma, its big rival, late last year to revive the company – directly referred to the “heat” surrounding the company Lifestyle models such as Samba, Gazelle and Spezial are among the mainstays of the business this year.
The “heat” of these Adidas models is easy to recognize on the street, be it on Serrano Street in Madrid or on the Champs-Élysées in Paris; But the reasons for this, as with everything in this industry, are harder to find: “I think they became fashionable because people were saturated with other models like the Dunk (Nike) or the Jordan 1,” says Fernando R. González, a collector, combines his work in a large company with his hobby of buying and selling exclusive sneaker models. “Everyone now has the white Samba, it is the fashionable shoe,” emphasizes this sneakerhead – as sneaker fans are called in the world – and points out a key: when they came into fashion, in the middle of last year, they were very so hard to get.
One of the most common Google searches for these sneakers is: “Why is it so difficult to get a pair of Adidas Samba?” The boom sparked by celebrities like Rihanna – who works with Puma – wearing them came as a surprise the brand that needed to speed up its production: “We went to the factories and told them, ‘Do you have the capacity?’” Gulden told Bloomberg in May. The answer was affirmative and the company demanded significantly higher production: “From May and June of this year we began to have thousands of pairs in the relevant distribution channels. By the end of the year there will be millions of pairs of Samba alone.” However, analysts warn of the danger of Adidas going too far and flooding the market with sneakers it can’t sell, forcing it to discount. It wouldn’t be the first time: Gulden warned back in May that the Stan Smith model – another classic of the brand that has sustained its sales over the last decade – would end up being sold in excess, creating the need for discounts and “ended the sale.” Popularity.”
Whether Samba or Stan Smith, Adidas continues to adhere to the principle that classics always work: “The Originals line has always been a salvation in the crises that Adidas has experienced, such as 2015 and 2018,” says the director of Intent HQ Chair for Changes in Consumer Behavior at IESE, José Luis Nueno. For the sales expert, Adidas now has to close the gap that has arisen with the Jeezy brand, an “innovative, furious clothing line that could be used to play with prices.” For now, Adidas has released some exclusive Samba collaborations, for example with the designer Wales Bonner, which quickly sold out after its release on November 8th.
The Yeezy case
Covering Yeezy’s creative and business side wasn’t easy. After the famous rapper’s anti-Semitic statements, the brand decided to end its collaboration with Ye in October last year and found itself at a crossroads: what to do with the dusty Yeezy products worth more than 1.2 billion euros? The solution is mixed: they sold the products worth 750 million euros and allocated part (140 million) for donations and the creation of a foundation that will manage future donations. Gulden noted in a video conference with investors in early November that they have not yet decided what to do with the rest.
The moves are convincing investors for now: “The behavior in the last six months has been very positive,” says Banco Sabadell analyst Arantxa Piñeiro. “Adidas has taken measures that have allowed them to mitigate the expected initial losses,” he points out. “Sales development is slightly better than expected,” which was also contributed to by the release of the Yeezy products. The 700 million losses they had expected if they were unable to bring the rest of the line to market have now risen to 100. So far this year, the company’s shares are up more than 45%, and its market capitalization is 33.5 billion euros. And the unexpected success of one of its oldest models is driving this comeback. “Sneakers are increasingly a hit industry that is no different than movies or music: you are successful and have a good year,” concludes Nueno. They are the ways of fashion.
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