Adidas on Wednesday reported its first annual loss in more than 30 years and expects sales in North America to decline. Part of the problem is that we have too much inventory. And it's not just Adidas, other sporting goods brands are also dealing with overstock on their shelves.
Sonia Lapinski of Alix Partners said that before your favorite sneakers hit store shelves, they've already gone on a long journey through the international supply chain.
“The cycle for footwear to be manufactured, purchased, and shipped is typically much longer than the typical apparel category,” Lapinski said.
Adidas and other companies have to choose far in advance which shoes to make and in how many pairs as trend cycles accelerate.
“By the time you have all this product in the country, consumer trends have changed, the market has softened somewhat, and they're just stuck with the excess and often the wrong stuff. ” she said.
And there are Adidas-specific problems at play, said Sean Grain Carter of the Fashion Institute of Technology. It concerns the merchandise of Ye, the artist formerly known as Kanye West, and his anti-Semitic rants.
“It affected their gross margin, it affected their bottom line, and it immediately affected their product and profitability. They're still trying to unload Yeezy-branded merchandise,” Kerr said. Tarr said.
And consumer demand for footwear and other sports apparel is unlike what it was in, say, 2021, Morningstar's David Swartz said.
“Their spending has shifted to other things, like travel. If they're spending money to go to Disney World or something like that, they might not be spending as much money on running shoes,” he says.
Adidas has some bright spots. Some of the brand's shoes are on-trend, like the Sambas, but there's only so much you can do with one shoe.
“For a company like Adidas, with annual sales of over 20 billion euros, you need a variety of products to be successful,” Swartz said.
He said competition is fierce in this global industry.
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