The battle for sporting goods supremacy: Nike vs Adidas 1. History time Van Thao - Brief history of Nike + In 1964: It was founded as Blue Ribbon Sports by Bill Bowerman, a track-and-field coach at the University of Oregon, and his former student Phil Knight. + In 1966: They opened their first retail outlet + In 1972: Launched the Nike brand shoe + 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. - Brief history of Adidas + In 1925: The business was founded by a German named Adi Dassler, when he operated the company out of a wash room and registered the name ‘Gebrüder Dassler Schuhfabrik’. + In 1949: Dassler started fresh 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. + In 1995 - now: Adidas has become the No. 2 shoe company worldwide, operating in 200 countries. Its offerings include shoes and clothing for sports such as football, basketball, and hockey, along with golf apparel and Rockport walking shoes. - Greatest achievement (Nike-Air cushioning; Adidas -Boost cushioning) + Nike’s highlight is the Air cushioning so far + To Adidas favorite product is the Boost cushioning technology 2. Put Nike vs Adidas on the scales- update 2021 (Adidas- Trang ) (Nike - AT) a. What products do Nike and Adidas make? ( business segments) - update 2021 ● NIKE - NIKE revenue for the twelve months ending August 31, 2021 was $46,192B, a 23.72% increase year-over-year. - Both companies sell three types of products. Nike makes the majority of their revenue from selling footwear (with 64%) with apparel being the second biggest revenue (32%). This is followed by sporting equipment such as balls and bags (3%) and 1% for others. - - - => Compared to its German competitor (Adidas), Nike’s revenue is slightly more weighted toward ● ADIDAS: 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. Adidas generates more of its overall revenue from selling apparel, but footwear is still the biggest product category for sales. footwear b. Where do they make their sales and revenue ? - - ● NIKE Nike breaks its financial metrics into three categories: NIKE Brand; Converse; and Corporate. The NIKE Brand is also broken down into geographical segments: North America; Europe, Middle East & Africa; Greater China; Asia Pacific & Latin America; and Global Brand Divisions,comprising 96% of the company's total revenue. Nike reports both revenue and earnings before - ● ADIDAS: 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. interest and taxes (EBIT), excluding segments with negative revenue or negative profits. + North America; Europe ( $4.0 billion-36%, EBIT $1.0 billion-33%) + Europe, Middle East & Africa ($3.0 billion; EBIT $660 million) + Greater China ($2.3 billion ; EBIT $891 million) and others (....) - + - - - Compared to Adidas, Nike exceeded by roughly 50% over recent years. Since 2015, it has been increasing at an average annual rate of 6.5%. Nike gave a head to head competition to Adidas by reaching a revenue of $39 B in 2018. This was 50% more than Adidas’s revenue in 2018. The apparel and footwear segment especially led to a rich growth followed by some global trends to increase health awareness => lead to a huge gap between Nike and Adidas’ footwear + + + Over 2015-2017 it grew its footwear revenue and took over the market. Here are a few key points that will explain the revenue to date: Since 2015, Adidas has added $5.8 B to its total revenues. This lead to average annual growth of 17.6%. Compared to Nike, Adidas went ahead in the race in the past couple of years with the launch of Adidas Neo and Originals in the sport market. In 2018, Adidas spent aggressively in marketing the products. The marketing expenditure for them in 2018 was $3.5 B, which was roughly 14% of their total revenue. In 2019 their annual revenue was $26.477 B which was a 2.3% increase from the previous year. - - revenues. As of 2018, Nike’s revenue of $24.2 B was roughly 60% more than that of Adidas’ $15 B. 2020 brought an economic dip for companies all over the world, and Nike too got a hit from it, revenue fell 4% due to COVID 19. In 2020, digital sales increased 47 per cent for them. + September 30, 2020, was a declining phase for Adidas where they generated a revenue of $22.631 B, leading to a decline of 12.83%. c. How have Nike and Adidas performed and share price? 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. ● NIKE - ● ADIDAS: Nike has had a tougher time dealing with tighter margins of late. Clearly, a defining factor when considering who is winning in this market is the capitalization: + 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: - 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: d. mini debate ( others factor cool: sport sponsorship, celebrity campaign...) (1,5-2min) NIKE ADIDAS Nike has always had an upper hand innovation and Adidas has always managed to keep its audience in design when it comes to the sport market. consideration to design its products undoubtedly. Adidas tend to keep the customers on the top Looking at the revenue as per 2020, Nike is leading. But Adidas spends a higher percentage of revenue on marketing On-court uniform provider in the NBA Adidas has earned a strong design pedigree with key collaborations Three Nike Innovation Kitchen designers defected to adidas …... 3. Adidas and Nike planned for the future (Yen) * Nike and Adidas have planned for the future: - Both Adidas and Nike have performed exceptionally well in the past few years and have reached their highest financial record in the year of 2017. Nike geared more toward high-growth China, while Adidas is looking to bolster market share in North America. As the two companies each look to digitally transform their businesses and focus on developing DTC strategy. * Nike’s strategy in the future: - The sports giant is now expecting 2022 revenue to hit over $50 billion As with previous years, Nike is honing in on digital and DTC. The company is expecting to reach 50% digital — through its own channels and its partners Relying on digital as the "leading channel for growth," growing DTC, and focusing on growth opportunities for women's business, apparel, the Jordan brand and international. Focus on Gen Z through channels like TikTok and Snapchat. Focus on direct-to-consumer (DTC): develop Nike Live stores *Adidas’s strategy in the future: - Adidas announces five-year plan, aims to double online sales A new strategy ‘Own the Game’ to strengthen the credibility of the Adidas brand. The new strategy is designed to significantly increase sales and profitability as well as gain market share until 2025 The strategic focus is on increasing credibility of the adidas brand, elevating the experience for consumers and - pushing the boundaries in sustainability Expects DTC business to generate over 80 percent of top-line growth in 2025 The company will focus on Greater China, EMEA (Europe, Middle East, and Africa) and North America Source: https://thehundreds.com/blogs/content/nike-vs-adidas-saga https://www.ig.com/en-ch/news-and-trade-ideas/shares-news/the-battle-for-sporting-goods-supremacy--nike-vs-adida s-180329 https://travel.earth/adidas-vs-nike/ https://www.retaildive.com/news/nike-plans-for-50b-in-revenue-next-year/ adidas - adidas presents growth strategy ‘Own the Game’ until 2025 (adidas-group.com) https://peakstudentmedia.com/2017/12/05/a-brief-history-of-adidas/ https://www.investopedia.com/articles/markets/080415/how-nike-nke-makes-its-money.asp https://peakstudentmedia.com/2017/12/05/a-brief-history-of-adidas/ https://wearicy.com/blogs/news/a-brief-history-of-adidas
