Adidas plans to stop the fall of Samba

While Adidas aims to capitalize on the high demand for its black-and-white three-stripe Samba sneakers and multicolored Gazelle sneakers, it's also taking steps to prevent the shoes from becoming victims of their own success.

The German sportswear giant increased production of sneakers, known as “terrace shoes” and inspired by the footwear of soccer fans in the 1970s and 1980s. Sales subsequently increased from a few hundred thousand pairs to month early last year to millions of pairs a month, according to CEO Bjorn Gulden, and Adidas is now looking to increase its popularity even further.

The company said sales of outdoor footwear helped drive its strong performance in the first quarter, without giving detailed figures for Samba, Gazelle and Spezial. The shoes are priced around $90 and up, and limited-edition collaborations cost up to $350.

Investors and analysts are watching closely for signs that Adidas is becoming too reliant on shoes, and the abrupt end of the highly profitable Yeezy business is still fresh in their minds. Adidas made a loss last year for the first time in 30 years after its split with American rapper and producer Kanye West ended that line of fashion sneakers.

Adidas Samba won Footwear News' 2023 “Shoe of the Year” award, the first win for the brand since the Yeezy Boost 350 in 2015.

Bernstein analyst Aneesha Sherman estimates that the terrace shoes will generate 1.5 billion euros ($1.61 billion) in sales this year, about 7% of Adidas' total revenue and close to the 1.7 billion euros that Yeezy contributed at its peak.

She predicts that sales of outdoor footwear will likely peak in all regions this year.
“Obviously and clearly, this trend will not last forever,” said Thomas Joekel, portfolio manager at Frankfurt-based asset manager Union Investment, which owns Adidas shares.

“At the end of the day, the consumer decides, and companies like Nike or Adidas have to be agile to join these trends.”

When British Prime Minister Rishi Sunak was seen sporting Sambas in a clip posted to Instagram earlier this month, some Brits felt he had dealt a blow to the shoe's street cred. Sunak later jokingly apologized to “the Samba community”, but chief executive Gulden said Sunak's penchant for the shoe had had no impact on sales.

Limited editions

Larger trend cycles can be painful for big sportswear manufacturers. In 2018, Adidas's sales in Europe, its largest market, fell as its minimalist white Stan Smith shoes began to go out of style. And Nike is currently reducing supply of its classic Air Jordan 1 shoes due to lower demand.

That's why Adidas is trying to spread its bets. Its thicker, skater-style Campus shoes are becoming more popular and outselling the Samba in some markets, Gulden said. Adidas also plans to step up marketing of its classic Superstar shoe to drive a renewed trend next year.

He recently released a $200 version of the shoe with designer Edison Chen, with a wavy sole. Gulden said Adidas has been working to clear the market of the Superstar's seasonal colors, focusing only on the classic black and white, to ensure the market is “fresh” for new releases later this year and next. .

“We will maintain the current franchises and then schedule Superstar activation as needed by us and retailers,” Gulden said. “We will not sell it globally in large volumes. We will delay it and let the consumer decide when they want the Superstar.”

Releasing more expensive limited-edition versions in collaboration with designers, such as the $350 Y-3 Gazelle with Japanese fashion designer Yohji Yamamoto, is one way to keep a product on-trend.

“What Adidas and Nike are doing with some of their products is trying to follow the luxury manual: premiumization, exclusivity, restricting supply, making everything more desirable so they can have higher margins and create a halo effect for the brand” Matt said. Clark, a retail expert at consultancy AlixPartners in London.

For retailer JD Sports, new variations of Samba footwear in different colors and materials are helping to keep shoppers engaged, CEO Regis Schultz said in its recent results. Retailer Foot Locker also noted “strong demand” for Adidas terrace styles.

“Gulden is very aware of the fact that you shouldn't overdo what you do to keep the model, to keep the brand and the model hot,” said Cedric Lecasble, an analyst at Stifel.

“If they distributed tens of millions of Samba in the same year, they would probably sell them, but they would probably also put an end to the Samba dynamic,” he said.