Industry Profile: (link)
Sportgamma.net articles on Adidas
Currently, the shares of Adidas AG. seem to be fairly valued. Using the takeover bid price of Timberland as the most recent real market multiple for a company in the sport apparel & footwear industry, we come at a fair value of €52 per share.
However it must also be noted that from a financial statement perspective, the operations of the group are very profitable, earning high returns on invested capital, indicating significant brand equity that is unaccounted for in the statements.
Strategy: Adidas vs Nike
One of the best sources that I have found on the global sport apparel and footwear industry is Kieve Saling´s Master thesis, Tracing the Portland Athletic Shoe Industry: Innovation, Time & Space, from Lund University in Sweden.
Retail/ concept stores
When it comes to retail there is a clear divergance in strategy. In recent years Adidas has put more emphasis on setting up their own retail stores.
Both companies have been integrating ICT into various stages of their value chain. Distribution is the most obvious integration but marketing has been moving towards customization. I do not know however if this has been profitable in any way.
“Lennart Schön has suggested that we are currently entering a new phase in the latest ICT-driven technology shift. This paper has taken that perspective, and supported the idea that firms that are prepared to successfully integrate maturing ICT technologies will, according to convincing historical analysis (Schön, 1998), be those that survive during the period of intense competition inherent to economic contraction. At present, it may be premature to think that we can predict which technologies and configurations will prove the most valuable. However, in consideration of demand-driven firms most open to employing new ICT technologies, Nike and Adidas both stand out as early-adopters. Perhaps it is their history of fierce competition that drives them, perhaps it is their extensive previous experience with the rapidly shifting economic terrain that today’s corporations must navigate through.” (Saling, 2009)
On the same note, customer feedback mechanisms will be an important source of edge, in product development and design.
“In the late 1970s, Adidas stumbled just as Nike was exploiting the rise in popularity of jogging. In the early 1980s, both firms missed the emergence of aerobics as a major new category of athletic activity. While some wonder how leading firms could have missed such huge phenomena, business history is rife with these kinds of gross tactical oversights. In this paper, it has been argued that, given the potential for the “hard-wiring” of customer feedback mechanisms and market research routines that online social networks represent, a well-positioned firm could avoid such oversights in the future by utilizing a body of unprecedented realtime consumer and market data. This paper has suggested that Nike, given its continued dedication to and excellence in innovation, and current focus on integrating and adapting maturing ICT technologies, is better positioned than Adidas in this regard.” (Saling, 2009)