Group 1 - The analyst previously gave a neutral rating to Adidas, awaiting the performance in Q4 2024 to assess the business turnaround [1] - Adidas did not disappoint in its performance, indicating positive developments in the company's operations [1] - The investment approach focuses on identifying undervalued companies with long-term growth potential, emphasizing the importance of buying quality companies at a discount [1]

Core Viewpoint - Adidas continues to innovate in running shoe technology, with the latest ADIZERO ADIOS PRO 4 showcasing significant advancements in weight and performance, reinforcing the brand's commitment to professional athletic gear [15][25]. Product Development and Innovation - The ADIZERO ADIOS PRO 4 is the lightest racing shoe in Adidas history, weighing 200g, which is 12% lighter than its predecessor, enhancing runner efficiency during long races [15][18]. - The shoe features a new forefoot rolling structure that improves propulsion and responsiveness, making it easier for runners to control their speed over long distances [17][18]. - Adidas has a history of successful shoe innovations, with the ADIZERO series being a key player in breaking world marathon records since its inception [10][11]. Market Position and Strategy - Adidas aims to be the best professional sports brand, focusing on performance running shoes as a reflection of its brand expertise [23]. - The company has seen an increase in market share from 8.2% to 8.9% in 2024, while Nike's share has decreased from 15.2% to 14.1%, indicating a positive trend for Adidas in the competitive landscape [25]. - The brand's commitment to innovation and performance is expected to drive growth in its running segment, aligning with consumer demands for high-performance athletic products [24][25]. Historical Context and Achievements - The ADIZERO series has a legacy of breaking records, with notable achievements including Haile Gebrselassie's world record in 2008 and subsequent records set by other athletes using the series [9][10]. - The introduction of BOOST technology in 2014 marked a significant advancement in running shoe performance, contributing to record-breaking performances [10]. Future Outlook - Adidas plans to continue its focus on innovation in sports technology, aiming to redefine the limits of competitive running and maintain its leadership in the market [25]. - The ADIZERO series is positioned to cater to both casual and professional runners, ensuring a broad appeal across different segments of the running community [19][21].

Investment Rating - The report does not provide a specific investment rating for the industry Core Insights - The report highlights the influence of nostalgic tennis shoes and 80s sports styles, emphasizing retro designs with modern elements [2][3] - Outdoor lifestyle trends are shaping the sneaker market, with a focus on practicality and lightweight designs [7][10] - The demand for easy-to-wear athletic shoes is increasing, prioritizing structures that allow for quick wear and removal [11] - The popularity of lightweight retro sneakers is on the rise, reflecting consumer interest in less bulky designs [16] - Vintage sports shoes are dominating the market, with styles like Samba and Gazelle maintaining strong popularity [20] - Jelly sneakers are characterized by bright colors and playful designs, appealing to a sense of nostalgia [25] - All-weather running shoes are gaining traction, with durable materials enhancing performance for outdoor training [30] - Retro running shoes are significantly impacting social media and retail, with brands like New Balance leading the trend [33] - Hybrid style shoes that combine traditional lacing with sporty elements are meeting consumer demands for comfort and versatility [37] Summary by Sections - **Nostalgic Tennis Shoes**: Focus on retro designs inspired by 80s styles, integrating modern elements like oversized tongues and low-top designs [2][3] - **Outdoor Lifestyle Influence**: Emphasis on practical, lightweight sneakers with features like slip-on designs and durable materials [7][10] - **Easy-to-Wear Athletic Shoes**: Growing importance of structures that facilitate easy wear, including alternative closure methods [11] - **Lightweight Retro Sneakers**: Increasing consumer interest in lightweight designs, moving away from bulky styles [16] - **Vintage Sports Shoes**: Continued dominance of retro styles, particularly Samba and Gazelle, in the market [20] - **Jelly Sneakers**: Bright colors and playful textures define this category, appealing to nostalgic sentiments [25] - **All-Weather Running Shoes**: Rising popularity due to durable materials and enhanced outdoor performance [30] - **Retro Running Shoes**: Significant influence on social media and retail, with New Balance as a key player [33] - **Hybrid Style Shoes**: Merging traditional and sporty elements to meet comfort and style demands [37]

Core Viewpoint - Adidas has successfully turned around its performance in the Chinese market, achieving double-digit growth in revenue for 2024, driven by a localized strategy and increased consumer engagement [1][2]. Group 1: Financial Performance - In 2024, Adidas reported global revenue of €23.68 billion, with the Greater China region contributing €3.46 billion, reflecting a 10.3% year-over-year increase [1]. - The fourth quarter of 2024 saw Greater China revenue reach €794 million, marking a 16.1% increase compared to the previous year [1]. - Adidas expects operating profit to rise to between €1.7 billion and €1.8 billion by 2025, excluding any revenue from the YEEZY line [1]. Group 2: Market Challenges and Recovery - From 2022, Adidas faced significant challenges, including a decline in revenue due to competition from local brands like Anta and a failure to adapt to changing consumer demands [1][2]. - The company experienced a severe inventory backlog and disruptions in sales channels, particularly after ending its collaboration with the YEEZY brand [2][6]. Group 3: Product Strategy and Innovation - In 2024, footwear accounted for over half of Adidas's revenue, with a 17% year-over-year increase when excluding currency effects [5]. - The Samba shoe line saw a remarkable 300% increase in sales, becoming a new revenue driver, while the YEEZY line's sales were significantly reduced [5][6]. - Adidas launched the "Adidas Essentials" line, which became one of the fastest-growing product lines, and increased the proportion of locally designed products in China to over 80% [6]. Group 4: Strategic Changes and Future Outlook - The new CEO, Bjørn Gulden, has emphasized the importance of direct-to-consumer (DTC) strategies while also strengthening relationships with wholesale partners, resulting in a 14% growth in wholesale channels and an 11% growth in DTC channels in 2024 [8][9]. - Adidas is focusing on expanding its presence in traditional sports like football and athletics while also investing in emerging sports and niche markets [10]. - The company aims to enhance brand visibility and health through innovative product lines and localized strategies, despite potential challenges in 2025 due to a lack of major sports events [10].

Financial Data and Key Metrics Changes - The company reported net sales of approximately €24 billion, reflecting a 12% currency-neutral growth [43] - The gross margin improved to 50.8%, a 330 basis points increase from the previous year, indicating effective product positioning and lower discount levels [27][50] - Operating profit (EBIT) reached €1.337 billion, a 400% increase year-over-year, demonstrating strong operational performance [28][44] Business Line Data and Key Metrics Changes - Footwear sales grew by 17%, leading the overall performance, while apparel started with negative growth but ended the year with a 6% increase [38] - Accessories growth was limited to 2%, indicating potential areas for improvement [38] - Performance products saw a 9% increase, while sportswear and lifestyle segments grew by 6% and 25% respectively, showcasing a successful strategy of leveraging lifestyle to drive brand heat [40] Market Data and Key Metrics Changes - North America experienced double-digit growth in Q4 for the first time in a long period, contributing to a turnaround after a challenging start to the year [30] - Europe maintained strong growth at 19-20%, while Greater China reported a 10% increase, indicating a successful recovery [32] - Latin America showed exceptional performance with a 28% growth, solidifying the company's leading position in the region [32] Company Strategy and Development Direction - The company aims to reduce complexity in its operations and enhance local market responsiveness, shifting decision-making closer to consumers [96][100] - There is a focus on expanding lifestyle products while maintaining a strong performance in sportswear, with plans for significant product launches in the coming years [19][40] - The company is committed to sustainability, with initiatives to reduce carbon intensity and increase the use of recycled materials [84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain growth despite market volatility, highlighting the importance of agility in operations [92][96] - The CEO noted that the competitive landscape is favorable for the company, as major competitors are facing challenges, allowing for potential market share gains [92] - The management emphasized the importance of local leadership and tailored strategies to meet diverse market needs [100][108] Other Important Information - The company has a strong balance sheet with €2.5 billion in cash, allowing for future investments and a robust dividend payout of €2 per share [76][79] - The company has initiated a voluntary program to reduce 500 obsolete roles at headquarters to streamline operations [102][104] - The company is actively engaging in partnerships and collaborations to enhance brand visibility and market reach [25] Q&A Session Summary Question: What are the expectations for growth in North America? - Management indicated that North America is expected to continue its recovery, with double-digit growth in Q4 signaling a positive trend [30] Question: How does the company plan to address the challenges in Japan and South Korea? - The company acknowledged operational challenges in South Korea due to a warehouse incident but remains optimistic about future growth in both markets through improved local management [111][112] Question: What is the strategy for sustainability moving forward? - The company reiterated its commitment to sustainability, aiming for 100% recycled polyester and significant reductions in carbon emissions [84]

Group 1 - Adidas has sold the last remaining pair of Yeezy trainers, concluding a significant chapter after severing ties with Kanye West due to his antisemitic comments in 2022 [1][2] - The termination of the partnership resulted in Adidas experiencing its first annual loss in over 30 years, with a reported operating profit of £250 million from Yeezy stock in 2023 and an additional £167 million in 2024 [2][4] - The CEO of Adidas, Bjørn Gulden, defended the decision to sell the remaining stock, stating it was preferable to destroying the inventory [3] Group 2 - In 2024, Adidas reported a 2% decline in North America revenues, attributed solely to significantly lower Yeezy sales, and forecasted lower earnings for 2025 [4] - The company is actively seeking new growth opportunities beyond its retro trainer lines, such as the Samba and Gazelle collections [4] - Despite Nike being the market leader in the US, Adidas aims to become the top sportswear brand in other markets [5]

Group 1 - Adidas reported a 19% increase in fourth-quarter revenues to 5.97 billion euros ($6.34 billion), surpassing the forecast of 5.72 billion euros by LSEG analysts [1] - The operating profit for the fourth quarter was 57 million euros, a significant recovery from a loss of 377 million euros in the same period last year [1] - The company is focusing on growing its market share in North America amid declining sales at Nike and a shift away from reliance on a weaker China [2] Group 2 - North America sales for Adidas fell 7% at currency-neutral rates in the third quarter, struggling to recover from the termination of the Yeezy sneaker line [3] - The Yeezy line was terminated following the end of the partnership with Ye due to his anti-Semitic remarks in 2022 [3] - Adidas expects to sell the remainder of its Yeezy inventory by the end of 2024, as CEO Bjorn Gulden aims to distance the brand from the loss-making line and initiate a broader turnaround since taking over in January 2023 [4]

Summary of the Conference Call on China Athletic Wear Sales Trends Industry Overview - The conference call focused on the **China athletic wear industry**, highlighting the sales trends for major brands like **Nike** and **Adidas** [1][2]. Key Insights Overall Market Conditions - The athletic wear sales growth rates in China for December, January, and February are **challenged**, with notable differences in brand performance [1]. - **Nike** is struggling, with sales falling below expectations, while **Adidas** is outperforming expectations [1][3]. Brand Performance - **Nike**: - Sales growth is likely running at **-LSD%** (low single digits) and is a few hundred basis points below expectations [3]. - Sales growth has decelerated slightly since December, indicating a potential loss of market share [3]. - Inventory levels have worsened over the last couple of months [3]. - The expert attributes Nike's struggles to a **lack of product innovation** [3]. - Future growth is expected to be flat to slightly down, but innovation improvements are anticipated by **4QCY25**, potentially aligning growth with the industry at **+M to +HSD%** over the next year or two [3]. - **Adidas**: - Sales performance has accelerated to the **high-teens** year-to-date after a softer December, surpassing expert expectations [4]. - Growth is driven by the **Terrace franchise**, particularly the **Samba**, along with strong performances from other franchises like **Gazelle** and **SL72** [4]. - The **Adizero** line and the apparel segment are also performing well, supported by a notable influx of new products [4]. - Optimism remains for Adidas to achieve **HSD to LDD** (high single digits to low double digits) sales growth in **2025F** [4]. Consumer Behavior - Macroeconomic uncertainty is leading to cautious consumer spending in China, with a notable shift towards online shopping channels, which are generally more promotional than brick-and-mortar stores [2]. Additional Insights - Promotions have generally increased year-over-year, and while inventory levels are elevated, they are not excessively high at this point [1]. - The overall consumer spending environment remains **choppy**, reflecting broader economic uncertainties [2]. Conclusion - The China athletic wear market is currently facing challenges, with Nike underperforming and Adidas showing strong growth. Consumer behavior is shifting towards online channels, influenced by economic uncertainties. Future growth prospects for both brands will depend on product innovation and market conditions.

Core Viewpoint - Nike is facing a decline in sales, with a reported 8% decrease in revenue for Q2 FY25 compared to the previous year, and is implementing a new strategy and leadership to regain market share in sports apparel [1] Group 1: Historical Context and Strategy - Analysts suggest that Nike should revisit strategies used during its previous challenges from 2015 to 2018 when it successfully countered Adidas' Ultra Boost sneakers by increasing product launches, re-elevating the Jordan brand, enhancing demand creation spending, and managing inventory effectively [2] - Nike's current focus is on performance wear, particularly in the running segment, which has been a competitive struggle against brands like ASICS, Adidas, Brooks, and Hoka [3][4] Group 2: Product Innovation and Market Competition - Nike is expected to launch new running shoes, including the Vomero 18 on February 27, 2025, as part of its strategy to boost product offerings and regain market share [5] - The company is advised to quickly adapt and produce shoes similar to Hoka's ultra-cushioned designs to remain competitive in the market [4] Group 3: Demand Creation and Marketing Efforts - Nike reported $1.1 billion in demand creation expenses for Q2 FY25, including a significant investment in a Super Bowl ad, which was its first in nearly 30 years, featuring prominent female athletes [6] - The marketing strategy appears to be effective, as Nike topped other Super Bowl advertisers in engagement actions, indicating a positive reception to its promotional efforts [7] Group 4: Future Outlook - Analysts emphasize that for Nike to reclaim its edge in sports apparel, it must focus on launching innovative products that align with consumer preferences [6][8]

Technical Analysis - Adidas AG (ADDYY) has recently experienced a "golden cross" event, indicating a potential bullish breakout as its 50-day simple moving average has crossed above its 200-day simple moving average [1][2] - The stock has moved 9% higher over the last four weeks, suggesting upward momentum [4] Earnings Outlook - The earnings outlook for ADDYY is positive, with no earnings estimates cut and two revisions higher in the past 60 days, leading to an increase in the Zacks Consensus Estimate [4][5] - Currently, ADDYY holds a 3 (Hold) rating on the Zacks Rank, indicating a neutral stance from analysts [4] Investment Consideration - The combination of positive earnings estimate revisions and the technical breakout suggests that investors should monitor ADDYY for potential gains in the near future [5]