Demand for Adidas retro-style Gazelle Samba shoes drives strong first-quarter growth

Adidas sees strong growth in Europe with retro-style sneakers, while North America struggles with overstock. Company rebounds after split with Ye.

Adidas reported strong first-quarter growth driven by high demand for its retro-style Gazelle and Samba sneakers, particularly in its home market of Europe. The company has been making a comeback after parting ways with rapper Ye, which resulted in the end of their lucrative Yeezy shoe line. Despite facing challenges in North America due to overstocked retailers, Adidas saw a 14% increase in sales in Europe, with CEO Bjorn Gulden attributing the success to the popularity of their "terrace" shoes.

The lifestyle business has been a key driver of sales for Adidas, with a 13% increase in footwear revenue overall. This turnaround has led to a positive momentum for the brand, reflected in a 25% increase in shares this year. In contrast, its competitor Nike has seen a decline in market share and sales, creating an opportunity for Adidas to capitalize on the market.

In China, Adidas experienced an 8% growth in sales, while North America saw a 4% decline. The company has been working on reducing excess stock and cutting prices to improve sales in the region. By focusing on pricing strategies and investing in the sports-focused market in China, Adidas aims to continue its growth trajectory.

Adidas has successfully reduced its inventory of footwear and clothing, leading to an increase in gross margin to 51.2%. The operating margin also improved significantly, indicating a positive outlook for the company. With a commitment to reducing discounting and capitalizing on high-margin products like terrace shoes, Adidas is on track to achieve double-digit EBIT margins in the future.

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