Nike vs Adidas- Battle To Be The Undisputed Leader Of Sports Apparel

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Giant Footwear Brands Nike -VS-Adidas

Logo NIKE.svgNike’s Swoosh logo

Nikeworldheadquarters.jpg

Nike World Headquarters in Beaverton

Formerly Blue Ribbon Sports (1964–1971)

 

Nike, Inc. is an American international company that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. The company is headquartered near Beaverton Oregon . It is the world’s largest supplier of sports Apparel  and footwear a major manufacturer of sports equipment with revenue in excess of US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, it employed more than 44,000 people worldwide. In 2014 the brand alone was valued at $19 billion, making it the most valuable brand among sports businesses. As of 2017, the Nike brand is valued at $29.6 billion.Nike ranked No. 89 in the 2018 Fortune 500 list of the largest United States corporations by total revenue.The company was founded on January 25, 1964, as Blue Ribbon Sports, by Phil Knight  and Bill Bowerman officially became Nike, Inc. on May 30, 1971. The company takes its name from Nike, the Greek goddess of victory. Nike markets its products under its own brand, as well as Nike Golf and subsidiaries including Brand Jordan, Converse and Hurley International. Nike  Bauer Hockey and Umbro. Nike sponsors many high-profile athletes and sports teams around the world, with the highly recognized trademarks of the Swoosh and the Just Do It logo.

Adidas AG

Adidas Logo.svgFormerly Dassler Brothers Shoe Factory  (1924–1949)

Industry Sports Apparel,Founded July 1924; 94 years ago
18 August 1949; 69 years ago(as Adidas)Founder Adolf Dassler Headquarters  HerzogenaurachGermany

Sculpture of Dassler in the Adi Dassler Stadium, Herzogenaurach, Germany

Adidas AG (German: stylized as ɑdidɑs since 1949) is a multinational corporation, founded and headquartered in HerzogenaurachGermany, that designs and manufactures shoes, clothing and accessories. It is the largest sports manufacturer in Europe, and the second largest in the world, after Nike.It is the holding company for the Adidas Group, which consists of the Reebok sportswear company, Taylor Made  golf company  8.33% of German football club Bayern Munich.

The company was started by Adolf Dassler in his mother’s house; he was joined by his elder brother Rudolf in 1924 under the name Dassler Brothers Shoe Factory. Dassler assisted in the development of spiked running shoes (spikes) for multiple athletic events. To enhance the quality of spiked athletic footwear, he transitioned from a previous model of heavy metal spikes to utilizing canvas and rubber. Dassler persuaded U.S. sprinter Jesse Owens to use his handmade spikes at the 1936 Summer Olympics. In 1949, following a breakdown in the relationship between the brothers. Rudolf established Puma, which became Adidas’ business rival and Adolf created Adidas

Adidas’ logo is three stripes, which is used on the company’s clothing and shoe designs as a marketing aid. The branding, which Adidas bought in 1952 from Finnish sports company Karhu Sports, became so successful .

 

Nike or Adidas Who Has The Superior Edge?

 

Adidas and Nike have been rivals for eons, regularly filing lawsuits against each other and competing for market share. However, over the last 20 years, the gap between Nike and Adidas may have widened. For 2018, Nike is the undisputed leader of sports  apparel  and sneakers. But, Adidas has been able to make the race competitive in recent years.

The Battle For Sporting Goods Supremacy: Nike vs Adidas

 

Nike

 

Nike and Adidas have been entangled in an incessant battle that has dominated the sporting goods industry throughout the modern era. Financially, Nike is much larger than Adidas, but the latter’s performance has been better over recent years.

Meanwhile, both the US and German sports labels have maintained two very recognizable brands around the world

So what has been different about Nike and Adidas in the past, what paths are they each heading down now, and what is in store for the pair and their share prices going forward?

A brief history of Nike: ‘Just Do It’

The company was founded by two individuals named Bill Bowerman and Phil Knight in Oregon, US, the inspiration for the company’s creation being to design better footwear for athletes. The firm was originally named Blue Ribbon Sports, before becoming the Nike the world knows today back in 1971.

The business only had one shoe and one t-shirt within its portfolio in the initial years, but now sells thousands of sporting products in about 170 countries spanning around the world.

A brief history of Adidas: ‘Impossible is Nothing’

The business was founded by a German named Adi Dassler in 1924, when he operated the company out of a wash room and registered the name ‘Gebrüder Dassler Schuhfabrik’. However, Dassler started fresh in 1949 with a new name, ‘Adi Dassler adidas Sportschuhfabrik’, and focused on footwear by registering the famous three-stripe design that Adidas still lives by today.

The business remained run by family until 1987, and almost went bankrupt in 1992 before Robert Louis-Dreyfus took over the helm in 1993 to mark a new beginning for Adidas. The firm now sells over 850 million products each year in 160 countries.

What products do Nike and Adidas make?

Adidas and Nike make the vast majority of their money from their core brands, the pair have other brands which help supplement earnings. As well as the Nike brand, the company owns Converse, Hurley, and the Jordan brand (after basketball  super star player Michael Jordan), while Adidas also owns the Reebok brand.

 

For Adidas, the core brand accounted for $19 billion of total revenue to serve as an explanation for over 91% of the company’s total revenue in the last financial year, while Reebok generated $1.8 billion.

All of Nike’s brands generated $34.4 billion in total revenue in the last financial year (running to the end of May 2017), while Adidas reported annual revenue of 19.2 billion euros in the last financial year, which matched the calendar year of 2017 (all charts below are based on these financial years).

Both companies sell three types of products. Nike and Adidas make the majority of their revenue from selling footwear, with apparel being the second biggest revenue driver for both. This is followed by sporting equipment such as balls and bags.

What products drive revenue for Nike?

Compared to its German competitor, Nike’s revenue is slightly more weighted toward footwear.

Products chart

What products drive revenue for Adidas?

Adidas generates more of its overall revenue from selling apparel, but footwear is still the biggest product category for sales.

Adidas products chart

Nike vs Adidas sales: where do they make their sales and revenue?

Adidas and Nike both have powerful brands that are sold around the world. North America and Western Europe are the pair’s two top regions for sales. Unsurprisingly, Western Europe is the main market for Germany’s Adidas while North America is the biggest market for America’s Nike.

Both have footholds in emerging markets, with Greater China representing the third largest market for the pair. However, Adidas generates more of its revenue in the country than Nike does.

Nike sales: where does Nike make its revenue?

Nike sales chart

Adidas sales: where does Adidas make its revenue?

Adidas sales chart

Where do Nike and Adidas source their products?

Unsurprisingly, both Nike and Adidas source the vast majority of their production from Asia, with Adidas concentrating slightly more of its manufacturing in the region than Nike. As expected, Nike has more production happening in the Americas, whereas Adidas has more facilities in Europe. Africa forms a tiny portion of overall manufacturing for both companies.

What countries are Nike suppliers in?

Nike has about 554 factories spread over 42 countries supplying it with footwear, apparel and equipment.

Nike suppliers chart

Nike has 8% of all its production based in the US. These production facilities predominantly produce apparel and some equipment, but no footwear is produced in the US whatsoever.

Chinese manufacturers supply 23% of all Nike’s production. The types of products these factories make is more evenly split between the three product categories, with a slight weighting given to apparel.

Factories in Vietnam contribute 16% of Nike’s total production, predominantly creating apparel and footwear with a small amount of equipment.

What countries are Adidas suppliers in?

Adidas has over 800 factories based in 55 countries supplying it with all three product types.

Adidas suppliers chart

Vietnam produces 44% of all Adidas footwear, followed by Indonesia at 25% and China at 19%. The largest single factory producing footwear accounts for about 10% of all footwear produced.

China is responsible for 23% of apparel made each year, followed by Cambodia at 22% and Vietnam at 18%. The largest single factory producing apparel accounts for about 10% of all apparel output.

China is also the largest producer of Adidas equipment, responsible for about 40% of the company’s total, followed by Pakistan at 18% and Turkey at 15%. The largest single factory producing equipment makes about 15% of the German company’s total.

How have Nike and Adidas performed over the last ten years?

Both Adidas and Nike have delivered consistent revenue growth over recent years, and net income for both firms reached record highs in the 2017 financial year. Adidas reached a milestone last year by pushing its gross margin over the 50% threshold, but Nike has had a tougher time dealing with tighter margins of late.

 

Gross margin

 

Shareholders in both companies have enjoyed reliable dividend payments, but Adidas shareholders have seen more consistent growth in dividend payments than Nike shareholders over more recent years.

How has the Nike share price performed?

Nike joined the New York Stock Exchange (NYSE) after completing its initial public offering (IPO) on 2 December 1980. The following chart covers the period since listing and is in dollars:

Nike share price chart

How has the Adidas share price performed?

Adidas launched its IPO on 17 November 1995, when it joined the Frankfurt Stock Exchange. The following chart covers the period since listing and is in euros:

Adidas share price chart

Brand Sponsorship: Adidas edged ahead of Nike in the 2018 World Cup

Sports sponsorship has been at a core activity for both companies throughout their lifetimes, and the pair are active in numerous sporting markets. The 2018 football World Cup that was hosted by Russia between 14 June and 15 July.

Adidas  not only sponsored slightly more, they also sponsored what was seen as better contenders, compared to its rival Nike. More teams  wore the Adidas brand than any other in the 2018 World Cup, with 12 teams in total, with Nike in second place, with ten teams signed up. There were 32 teams that competed in total.

Adidas had the former current World Cup holders (Germany) on its list, alongside Argentina, Spain, Belgium, Colombia, Egypt, Iran, Japan, Mexico, Morocco, Russia, and Sweden. That represents a rise from the nine teams Adidas sponsored in the 2014 World Cup in Brazil. The company sponsored 12 teams in 2010, and just six squads in 2006.

Since 1970,

Adidas has been a major sponsor of the FIFA World Cup supplying , referee uniforms, and official match balls for the tournament.

The ten squads that was sponsored by Nike comprised of the always favorite Brazil, as well as France, Portugal, England, Australia, Croatia, Nigeria, Poland, Saudi Arabia, and South Korea. Three teams that Nike has long supported (the US, Chile, and the Netherlands) did not qualify in 2018. This means Nike is sponsoring the same amount of teams it did at the last two World Cups but up from the eight teams sponsored in 2006.

However, Nike also has Umbro under its umbrella, which is sponsored two teams Serbia and  Peru .

The other sponsors to feature in the World Cup are  Puma, founded by the brother of Adidas founder Dassler, is only sponsoring two teams this year in what will be a disappointment for owners Kering, that also owns the Gucci brand. New Balance, Uhlsport Thornico-owned Hummel and Errea.

What do Nike and Adidas have planned for the future?

Each company has strategic plans that run until 2020. Nike and Adidas are both looking to grow revenue and earnings over the next couple of  coming years,

Adidas is looking to bolster market share in North America

with Nike geared more towards high growth in Asia more so in  China .Pending relations between the White House and Beijing.As seen relations  between these two world powers has hurt the Apple brand  sales in Asia

As the two companies each look to  transform their businesses using more digital resources. Nike is focusing on new materials for its products, while Adidas seems more attentive to design by opening up its brand to consumers and other designers.

What strategy does Nike have going forward?

As the world’s leader in sport, Nike is currently working toward goals under a plan that is due to finish in 2020 called ‘The Consumer Direct Offense’, that hopes to transform three core areas of the business: innovation, the supply chain, and the marketplace.

Nike is aiming to double its innovation in performance and sportswear, having recently added new materials such as the VaporFly 4% carbon fiber plate and ZoomX foam.

The business is also looking to tighten relations with consumers by forming more direct connections through digital, membership, personalization and brand experiences.  It is striving to enhance retail partnerships to maximize its brand. While China (where Nike boasts a market-leading position) is prime for more stores to be opened, the company has also continued to roll out its online store to more countries.

For the supply chain, Nike is aiming to trim the design-to-delivery time by exploring better sourcing, automation, new methods of make, and closer-to-market manufacturing.

 

Nike is aiming to deliver high-single to low-double digit revenue growth each year up to 2020, with earnings to grow at a faster rate. The company is also looking to grow free cash flow faster than net income and improve its return on invested capital.

What strategy does Adidas have going forward?

 

Currently  Adidas is working towards a strategic plan named ‘Creating the New’ that runs until 2020, the primary purpose of the plan being to make its brand more desirable. The plan was updated in March 2017 to accelerate its growth targets.

The three pillars that will drive brand desirability are speed, cities, and open source.

Speed refers to fashion trends and stock availability. Adidas aims to ensure it is never out of stock and is ready to respond effectively.

Adidas is looking to bolster market share in North American Cities

Open source is arguably the most interesting part of the Adidas plan. This is centered on opening up the brand to consumers and outside designers to provide a fresh and more engaging design process. This will also see Adidas continue to release products designed in partnership with athletes and high-profile designers.

Adidas, like almost all companies and sectors, is also transitioning to a more digitally focused operation, with the aim of generating 4 billion euros in e-commerce sales by 2020.

 

Although a huge brand in the region, Adidas believes North America offers the most growth potential moving forward, which will turn up the heat on the competition with Nike

 

If you consider yourself as a passionate online shopper like myself,Ebay has amazing  deals on the best products.I hoped you enjoyed the Nike vs Adidas- Battle To Be The Undisputed Leader Of Sports Apparel  article and if you have any  questions and  want to leave a comment or want to leave your own personal review,please leave a comment below .

Thank you.

Erick Darke

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