SNEAKER HEAT

Adidas is banking on a new set of sneaker classics for when the retro trend cools down

Obsession
Fashion
Obsession
Fashion

The popularity of retro sneakers has been one of the driving forces behind Adidas’ remarkable growth streak over the past couple years. They’ve perfectly matched up with the market’s appetite for sports-inspired products that are as much about fashion as performance.

But the German brand’s vault of decades-old designs isn’t its only strength in this area. Adidas has also been introducing new designs in its lifestyle-focused Originals business that are finding a growing number of customers. The company is banking on them to help keep its sales high as demand for retro styles runs its course.

On a call with investors to discuss yet another quarter of strong growth, Adidas CEO Kasper Rorsted said the company is seeing 50% growth in its modern franchises, which include popular new launches such as the NMD—a big hit in fashion circles. “The split between ‘old’ and ‘new’ franchises is close to 50-50,” he said, emphasizing that it means Adidas’ business can remain stable as different franchises enter different stages of their “life cycle.”

Right now, one danger to the company is being too reliant on a single style, such as the Superstar. The sneaker was the top seller in the US last year—but it was also Adidas’ only sneaker in the top 10. It was the brand’s biggest seller in the US in the first quarter of this year too, according to research firm NPD Group, though modern styles, such as the NMD, Tubular Shadow, and Alphabounce, helped round out its top five.

Demand for classics is still rising, though at a slower rate. NPD found sales of the category grew 11% in the US for the quarter, a decline from the previous trend. Adidas, meanwhile, recently revealed that it has a push planned for other retro styles, including the Samba and Gazelle, to capitalize on whatever’s left of the trend.

Whether it persists much longer or not, Adidas is in an enviable position. Its sales for the quarter grew 19% (pdf), including a jump of 31% in the US, an impressive feat given that the US sneaker market shrank 3% to start the year. It can’t even keep up with demand for its popular Boost soles, which feature on some new sneakers such as the NMD, Ultra Boost, and Iniki, saying it will have constraints on the quantity it can produce with partner BASF until 2019.

“We currently have a very high level of brand heat,” Rorsted said on the call. Adidas should stay hot for some time yet.

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