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- Adidas posted strong earnings for 2018 on Wednesday, but it came with a few warnings for this year.
- Some popular sneaker styles, like the Stan Smith and Superstar, have fallen out of favor, CEO Kasper Rorsted said during a press conference.
- Adidas sold $565 million less of the shoes in 2018 versus 2017, and it is now focusing on its Kanye West collaboration, Yeezy.
- Adidas also said it would not be able to meet strong demand for mid-priced apparel due to supplier constraints.
Adidas is predicting a bit of a stumble in 2019.
The company posted strong earnings for 2018 on Wednesday, with sales up 17% for the brand in North America and 8% globally on a currency-neutral basis.
But CEO Kasper Rorsted issued a few warnings and changes in its strategy for the coming year.
Some formerly popular sneaker styles, like the Stan Smith and Superstar, have fallen out of favor, he said in a press conference. Adidas sold $565 million worth less of the two huge franchises in 2018 compared to a year prior.
"The life cycle goes up, and the life cycle goes down," Rorsted said. "This has been the case for the Stan Smith and Superstar since they were founded."
"We do manage the trend up and manage the trend down," he said.
Stan Smith and Superstar were both hot for years, but their sheen has faded even as Adidas has become more popular in the US. In 2016, the Superstar was the top selling sneaker in the US in terms of dollar sales, according to The NPD Group.
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Signs that the Stan Smith and Superstar would not stay popular for long appeared in 2017, when Foot Locker CEO Dick Johnson told analysts in an earnings call that the shoes had approached their peak.
"I think it’s the cycle slowing down. Superstars and Stan Smiths have been around a long time and they have waves that they come through," Johnson said.
Johnson said the sneakers were still selling, just not as quickly as they once did in 2016, when it seemed "every teenage female, potentially in the world, needed to have a pair."
Two years later, and it seems the trend is almost completely over, but Adidas is still seeing growth in important markets like the US, Rorsted noted.
Part of that is due to the growth of relatively new franchises like Ultraboost — which Rorsted says is now worth more than $1 billion for Adidas — as well as managing and reintroducing other classic retro shoes like the Yung.
Adidas is also continuing to evolve its strategy for its Kanye West collaboration, Yeezy.
"In a normal year, we’ll have between 20 and 30 launches of Yeezy products," he said. "Three years ago, we did two or three."
Some of these new sneakers won’t be as limited of a release as Yeezy shoes have traditionally been.
"We changed the model, but it does not change the fact that we will make very scarce launches for certain shoes, and sometimes we’ll suddenly have a different shoe," Rorsted said.
Adidas also said in its earnings report that a supplier issue related to apparel will cause the company to miss some opportunity for moderately priced apparel, which will be a drag on growth for 2019.
Adidas says it expects to see between 5% and 8% growth on a currency-neutral basis for 2019.
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Source: Business Insider – dgreen@businessinsider.com (Dennis Green)