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Adidas powers ahead in North America and China
August 3, 2017 / 6:18 AM / in 3 months

Adidas powers ahead in North America and China

BERLIN (Reuters) - Adidas (ADSGn.DE) will pour more cash into marketing to try to stay ahead in the race with U.S. rivals Nike (NKE.N) and Under Armour (UAA.N), the German sportswear firm said on Thursday as it reported another quarter of bumper sales growth.

Adidas will have an extra 700-800 million euros ($829-$948 million) to spend on marketing up to 2020 as sales grow fast, Chief Executive Kasper Rorsted said, pointing to a deal the company signed on Wednesday to extend its partnership with North America’s Major League Soccer (MLS).

Adidas, which had already announced preliminary second-quarter results and raised its 2017 guidance last week, said sales grew 28 percent in China and 26 percent in North America, though they fell 11 percent in Russia.

By contrast, Nike and Under Armour both reported flat North America sales in their latest quarters and said they would cut jobs to better compete.

Adidas shares, which hit a record high of 194.15 euros on Aug. 1, were down 0.5 percent at 190.85 euros at 0927 GMT.

Rorsted said Adidas was expanding its U.S. base in Portland, Oregon - near where Nike has its headquarters - and noted the firm received more than 300,000 job applications in the country in the first half of 2017.

FILE PHOTO: An Adidas logo is pictured on a shoe before the company annual general meeting in Fuerth near Nuremberg, Germany, May 11, 2017. REUTERS/Michaela Rehle/File Photo

The Adidas retro basketball shoe Superstar was the top selling sneaker in the United States in 2016 and some analysts have expressed concern the German brand could suffer when that trend wanes.

But Rorsted said new fashion styles like the NMD, Tubular and EQT were more than offsetting slowing demand for Superstars and Stan Smith retro tennis shoes.

The NMD Runner and Tubular Shadow have joined the Superstar in the top 10 best-selling shoes in the United States, usually dominated by Nike, market intelligence firm NPD says.

Adidas running shoes are also flying off the shelves, with Rorsted saying capacity constraints mean it has been unable to keep up with demand for its springy Boost sneakers, with sales of the UltraBoost model more than doubling in the quarter.

Adidas still aims to keep marketing spending to about 13 percent of sales in 2017, with the budget weighted to the second half of the year after it underinvested in the first, a spokeswoman said.

Rorsted declined to comment on reports the MLS deal is worth $700 million over six years.

Reporting by Emma Thomasson; Editing by Maria Sheahan and Mark Potter

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