Adidas dethrones Under Armour as No. 2 sports brand in US

Dive Brief:

Athletic gear retailer Adidas’s U.S. sales have overtaken Under Armour to regain the No. 2 spot behind rival Nike, according to research from NPD Group sports retail analyst Matt Powell, who tweeted the news Tuesday.
Adidas has been working on a comeback after losing the second position to Under Armour in 2014. Adidas first introduced a three-pillar strategy last year, and gave further details in July.
Adidas USA president Mark King mostly downplayed NPD’s results, telling Fortune: “I don’t think we think about it in those terms. We have to be better, and we have to compete more. We have five times the assets that Under Armour does to be able to compete. I think if we do the right things, we certainly will compete at a much higher level.”

Dive Insight:

There have been signs that Adidas USA was on the rise: It had 13 of the 60 top-selling shoes at Foot Locker in October, for example, up significantly from the two that made September's list. Meanwhile, six Nike shoes dropped off the list in October, but 46 hung on. Under Armour went from having one shoe on the list in September to none this month.

After five bad years in the United States, Adidas announced a three-pillar turnaround strategy last year, emphasizing Speed, Key Cities and Open Source. The company gave further details of that strategy in July as it reported North American sales increases in the first quarter, outpacing growth at both Under Armour and Nike.

As part of a comeback, Adidas has also increased its collection of streetwear and ramped up its partnership with athletes as well as creatives. The retailer announced in June that it is expanding its relationship with music and fashion icon Kanye West, developing “a Yeezy-branded entity creating footwear, apparel and accessories for all genders across street and sport.” The German sportswear giant described the deal as "the most significant partnership ever created between a non-athlete and an athletic brand.”

The move to occupy more space in non-sports footwear is paying off for Adidas, according to Cowen & Co. analyst John Kernan. Earlier this month, Kernan raised his estimates for Adidas' second half and fiscal 2017 sales and earnings per share, citing the brand's momentum in North America and opportunity to boost margins, according to CNBC. "As consumer tastes and preferences have shifted over the last year to a more retro and casual aesthetic, Adidas has led the way," Kernan said.