Café de la Bourse put Adidas under the microscope. We looked at the mission and ambitions of the group, the details of its activities and its financial performance. We also looked at the technical configuration of the Adidas share price on the stock market.

Adidas: mission and ambition of the German sportswear and equipment manufacturer

Adidas was founded by two brothers with the idea of ​​creating a new line of clothing, footwear and accessories innovative solutions for athletes that would meet their performance needs.

Adidas formulates its mission as follows: “through sport, we have the power to change lives”. Sport plays an increasingly important role in the lives of an increasing number of people. It is at the heart of every culture and every society and is essential to health and happiness.

Based on this premise, Adidas' ambition is to be the best sports brand in the world. "Nothing is impossible", in addition to being Adidas' flagship advertising slogan, is claimed as a true pillar of the company's culture.

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Adidas' competitive advantages

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Adidas' strategy 2025: Own the game

In March 2021, Adidas presented to investors its 2025 strategy entitled “own the game”. It presents a number of expected results of the group.

The focus is on brand credibility, consumer experience and sustainability. The business model will be mainly based on direct sales, the share of e-commerce should double to reach between 8 and 9 billion euros. Finally, 9 out of 10 Adidas items will be durable.

The financial ambitions are to increase revenue at a rate of between 8 and 10% per year on average between 2021 and 2025. The operating margin, meanwhile, should reach a level of between 12% and 14%. Finally, the increase in net profit is expected at a rate of between 16% and 18% per year on average between 2021 and 2025.

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What products does Adidas sell?

Adidas is one of the world leaders in the design, manufacture and marketing of footwear, clothing and sports equipment. The group's products are marketed in particular under the Adidas, TaylorMade and Reebok brands. Turnover is divided between footwear (56.1%), clothing (38.7%) and sports equipment (5.2%) such as golf clubs, balls, etc.

The products are sold under different brands: the most famous and inspiring is the eponymous brand Adidas, which represents 91% of sales in 2020. There is also Reebok, which is more “fitness” oriented and which follows fashions more closely. Reebok represents 7% of turnover. The rest of the turnover is generated by other brands such as TaylorMade.

Note that Adidas sold Reebok last August to the American company Authentic Brands Group. However, the transaction should be completed in the first half of 2022, after the approval of the competent authorities.

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How does Adidas distribute its products?

The retail channel

With more than 2,500 owner stores , the physical distribution channel is the most important for Adidas. Physical stores include both traditional stores, but also “concept stores” and “outlets” to try to satisfy all customer needs and offer the best brand experience.

The e-commerce channel

Adidas e-commerce platforms are available in over 50 languages ​​and operate in over 40 countries in all major markets. The turnover concerning sales made on e-commerce platforms reached more than 4 billion euros in 2020.

Wholesale

In 2020, the majority of consumers purchased sporting goods in a multi-brand wholesale environment.

Wholesale is an important channel for the brand to reach consumers. The primary focus in the wholesale business is to gain market share in critical touchpoints with online and offline consumers.

Geographical breakdown of sales

The geographical breakdown of sales is as follows: Europe (27.7%), Russia (2.9%), Asia-Pacific (33.7%), America North (24.8%), Latin America (5.8%) and other (5.1%).

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Fundamental analysis of Adidas shares

For the announcement of the results for the third quarter of 2021, the CEO of Adidas, Kasper Rorsted declared that "Adidas performed well in an environment characterized by severe challenges on both the supply and demand side."

“Thanks to successful product launches, we are seeing strong revenue momentum in all markets that are operating without major disruption […]. At the same time, we navigate through the current constraints of the global supply chain. Despite all these challenges, we are on track to deliver a successful first year of our new strategic cycle. »

Adidas' revenue up 3%

Despite a difficult market environment in China, blockages linked to the Covid epidemic and supply chain constraints, the loss of turnover is estimated at only 600 million euros. In Europe, Adidas' revenue rose 3% in the third quarter to 5.7 billion euros.

Adidas' gross margin at 50.1%

Adidas' gross margin in the third quarter decreased slightly, by 0.2 percentage points, to 50.1% (2020: 50.3%), despite the positive effects of a significant increase in full price sales, due to the negative impact of exchange rate fluctuations, the significant increase in supply chain costs as well as of a less favorable market mix.

Adidas' operating result at €672 million

The company's operating profit reached a level of €672 million (2020: €735 million), reflecting an operating margin of 11.7% (2020: 13.2%).

Adidas' net income of €479m

The company's net income from continuing operations was €479m in the quarter (2020: €535m ), reflecting basic earnings per share from continuing operations of €2.34 (2020: €2.58).

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Technical analysis of Adidas

Graph of evolution of the stock price of Adidas

Source: Café de the Stock Exchange, graph built on Tradingview, data for information only

Technical analysis of Adidas stock

Adidas stock has been in a declining channel since its high for the year in August (delimited by the gray area on the chart). Adidas' share price had reached 330 euros in August, marking an increase of 13.8% since January 1. Since then, the Adidas share price has fallen by more than 17% to close at 263 euros on December 8, 2021. In total, the Adidas stock price is down 10.9% over the year 2021. In the short term, the trend is negative, with Adidas stock price below its 20-day moving average (in blue on the chart) and MACD in negative territory, below its signal zone. The RSI is in the neutral zone. The next level of support is at 254 euros (in black on the chart).

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Turbo Bourse Adidas

To trade Adidas shares, contact your stock broker. For example, you can choose to use a derivative product such as Turbo call or Turbo put to take advantage of bullish and bearish fluctuations in Adidas shares.

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