Adidas (ADSGn.DE) is expected to report strong second-quarter sales and its highest profit margin in three years, driven by the success of its low-rise, multi-colored Samba and Gazelle sneakers. This comes as rival Nike (NKE.N) forecasts a surprise drop in annual sales, raising investor concerns about its performance compared to competitors.
Nike shares fell by 20% following the announcement, while Adidas shares remained stable, indicating investor confidence in Adidas’ potential to capitalize on Nike’s weaknesses. “Nike is off its game, and Adidas is having a moment,” said Simon Irwin, retail and sporting goods analyst at Tanyard Advisory.
Adidas’ innovative approach with new colors and limited editions of its popular shoes has kept consumer interest high, reflected in a surge of online searches for “Adidas Samba.” Analysts predict Adidas will report a profit margin of 51.4% and a 4.5% rise in quarterly revenue to €5.6 billion ($6.1 billion).