“We want to focus on all the things that are important in the US, especially sports,” said Rupert Campbell, the company’s president in North America, in an interview.
The German sportswear brand recently said it has invested hundreds of millions of dollars in a newly opened facility in Los Angeles, where it will base its basketball product team, and in upgrading its main US center in Portland, Oregon. In addition, the company plans to open additional US stores, new partnerships with athletes and recently renewed a long-standing partnership with Major League Soccer.
New adidas CEO Björn Gulden, a former professional soccer player, is looking to leverage the brand’s sports strengths to recover from recent difficulties, with a greater focus on basketball and soccer in the US. Suffering from the failure of some of its most famous ventures, including the loss of the lucrative Yeezy partnership with rapper Kanye West, adidas has also suffered setbacks in Russia and China. “We have to focus on the sport – that’s the root of adidas,” said Campbell.
The company’s sales of athletic apparel and equipment rose last year, while fashion sales fell as celebrity partnerships fell short of expectations. adidas ended its Yeezy collaboration with West, now known as Ye, in October over his anti-Semitic remarks. The termination of the partnership – which analysts estimate accounts for about 8 percent of the company’s annual sales – pushed adidas into the red in the final quarter of 2022.
Meanwhile, adidas and pop star Beyoncé will end their collaboration with Ivy Park later this year after sales fell short of the company’s targets, The Wall Street Journal reported. Its collaboration with Pharrell Williams’ fashion label Humanrace also didn’t pan out, as sales last year fell about 70 percent from a peak five years earlier, according to people familiar with the company’s history.
Williams’ recent appointment as creative director for menswear at Louis Vuitton could be a stepping stone for adidas to revitalize the partnership, according to Gulden. adidas declined to comment on the sales figures. Humanrace did not respond to a request for comment.
While adidas will continue to work with prominent partners, sport is now at the heart of its US business, Campbell said. Breaking Nike’s dominance in the US market – especially in basketball – has long been a challenge for adidas, and gaining ground will likely require significant investment.
Last year, the company’s sales in North America were about 7 billion euros – about a third of Nike’s sales. In recent years, adidas has competed with Under Armor for number 2 in the US sportswear market. Campbell believes that this relatively low base gives adidas room for growth. “Our part in basketball is this,” he said, making a tiny gesture with his thumb and forefinger. “So we think there’s an opportunity there.”
adidas was the official supplier to the National Basketball Association (NBA) until 2017, when Nike took over the role of supplier to the NBA uniforms. Relocating the company’s basketball division to Los Angeles should help adidas gain a foothold in this important market, Campbell said. With a base in the city, which he described as the heartland of basketball culture, the company can be closer to its target customers, he added.
The Los Angeles office will also handle celebrity collaborations. The company already has partnerships with NBA stars like Damian Lillard of the Portland Trail Blazers and Donovan Mitchell of the Cleveland Cavaliers. In football, the partnership with Kansas City Chiefs quarterback Patrick Mahomes is the company’s greatest asset, Campbell said.
adidas also has its sights set on the booming US soccer market, Campbell said, and recently extended its partnership with Major League Soccer through 2030. Under this agreement, the company is the official supplier of jerseys and other equipment to all clubs in the league. Since the launch of this season’s MLS jerseys in February, sales of football products have increased by 50 percent year-on-year, Campbell said. The company expects that demand for football products will continue to grow as the US will host the next World Cup in three years.
However, adidas is not expanding in all sports. The company will end its relationship with the National Hockey League (NHL) in 2024 after seven years as a jersey partner. The US online sports retailer Fanatics will take over the contract for ten years. adidas declined to comment on the reasons behind the split from the NHL. While adidas has a history of underperforming in the US, now is the time for the company to thrive in the world’s largest sporting goods market, Campbell said. “We have to show what we’re capable of in this area,” he said.
By Trefor Moss
NEW YORK (Dow Jones)
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