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Adidas Slumps as Retro Shoes Wane on European Home Turf

The sportswear company expects sales growth to slow this year due to the retro footwear boom losing momentum in Europe and supply chain problems in North America.
Adidas sneaker | Source: Shutterstock
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  • Bloomberg

FRANKFURT, Germany — Adidas AG shares slumped after the company said it expects sales growth to slow this year, with the retro footwear boom losing momentum on the company's European home turf.

The German sportswear maker has gotten a boost in recent years from reissues of Stan Smith tennis shoes and Superstar basketball kicks. As sales of those models ease, Kanye West's Yeezy line, which became more widely available in late 2018, has not yet taken over the baton.

The shares fell as much as 6 percent early Wednesday in Frankfurt, the most since May 2018.

Sales growth this year will be as much as 3 percentage points behind 2018’s 8 percent, the company said Wednesday. Adidas is facing growing momentum from arch-rival Nike Inc., which is benefiting from a raft of hot-selling new products.

Adidas has been struggling in Western Europe, which accounted for about 23 percent of sales in the fourth quarter. Sales fell in the region last year, but the company forecast a “slight increase” in 2019, adjusted for currency swings.

The full-year growth rate will also probably suffer by 1 to 2 percentage points because of supply chain shortages in North America, it said. That’ll prevent Adidas from meeting the "strong increase" in demand for mid-priced apparel, the company said.

While Adidas is growing in China, chief executive Kasper Rorsted said the company needs to rebalance sales in Europe. The company is aiming to sell more sports performance goods in the region, where its fashion-focused Originals line makes up about half of the business, compared with just a third globally.

“We can turn it around,” Rorsted said. “It’s very much in our destiny.”

Adidas proposed a dividend of 3.35 euros a share for last year, surpassing the average analyst estimate. Adidas also plans to buy back 800 million euros ($902 million) of shares this year.

By Tim Loh in Munich; editors: Eric Pfanner, Frank Connelly.

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