Adidas looks to holidays to buoy sales from losses in Yeezy partnership

More than a year after Adidas’s very public breakup with Ye last October, the sportswear giant is attempting to position itself for a rebound during the holiday shopping season.

CEO Bjørn Gulden, who took over at the start of the year, said earlier this month that the Samba—in addition to other Terrace shoes including Gazelle and Spezial—has driven sales.

• Additionally, rather than destroy or write off its excess Yeezys, Adidas has been selling them off, which has also helped the company’s outlook by shrinking its operating costs.
• As a result, the company adjusted its guidance to project a loss of $106 million—a high figure but much lower than the previously expected $493 million loss reported earlier this year due to the Yeezy inventory problem.
• The company’s Samba shoe is one of the most in-demand products on the market and was recently named “Shoe of the Year” for the FN Achievement Awards.

“Seasonal items like fleece are always a hit during the holidays,” Andre Graham, VP and head of stores at Adidas, told Retail Brew. “We also like to celebrate product across all of our key categories, like Samba in originals and Ultraboost in running as just a couple examples.”

Come on, come all: In-store shopping is expected to take more precedence during the holidays compared to last year, according to Bankrate survey data.

• Gulden said that he sees promise in Adidas’s physical spaces, particularly in New York, as well as its DTC business as in-demand, new inventory has come in.
• Part of that improvement is attributed to high discounts and the correct product mix, which Gulden said the company will continue to take a more conservative approach over the next six months.
• For Adidas’s sales, the split is 63% wholesale and 37% DTC, while brick-and-mortar versus e-commerce is an even 50/50 split.

“I think all retailers worldwide will say, ‘Wow, the service we feel now from [Adidas] is great. And I think they want to do more business with us,’ and that was the goal nine months ago to get there,” Gulden told investors during an August earnings call. “And then we will have to show that the product we are doing is also selling and knowing that our DTC business in the full price stores is up already like-for-like double digit. That gives us a good indication that the right product in the right location with the three stripes on our logo works.”

The big picture: The story for Adidas this year has been “things are not great, but they could be worse.” The company inventory levels dropped 23% this year, but, as Reuters notes, that’s positive given that many of its competitors have been dealing with the issue of excess inventory and having to sell it off at massive discounts.

• Still, Yeezy hasn’t even been Adidas’s biggest issue, as the company’s business in China saw a 36% drop in sales last fiscal quarter.
• In response, Adidas opened a new, fully-automated distribution center in Suzhou, China, in September.

“Our consumer is at the heart of what we do and making the shopping experience as easy and seamless as possible is a top priority for us,” Graham said. “We have a number of different omnichannel capabilities to ensure that every consumer has the best opportunity to find what they are looking for, no matter where or how they choose to shop.”