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Will Adidas (ADDYY) Remain On Top After its Quarterly Report?

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Adidas (ADDYY - Free Report) is expected to report its next quarterly earnings after the bell on August 9. Shares of ADDYY gained less than 1% just one day ahead of its upcoming earnings release. In the past year, Adidas has remained on the forefront compared to its competitors Nike (NKE - Free Report) and Under Armour (UAA - Free Report) ,  but recently, its stock has remained stagnant.  

Adidas reported an increase in revenue, gross margin and operating margin in its last quarterly report. The company saw both top and bottom line growth driven by its strategic focus areas – North America, China and e-commerce. In its quarterly report tomorrow, investors should look towards any sales growth driven by those three areas, as well as any qualitative measures.

Latest Outlook

According to our Zacks Consensus Estimates, Adidas is expected to report earnings of $1.13 per share on $6.15 billion in revenue. These results would mark year-over-year growth of 20.21% and 15.87%, respectively. 

Growth in Focused Segments

In its previous quarterly report, the combined sales of both the Adidas and Reebok brands grew in the North America, Asia-Pacific and Latin American market segments. There was 21% growth in North America, 15% growth in Asia-Pacific and 10% in Latin America. All of the markets saw a double-digit increase, which is what we can expect in the upcoming report as well.

According to Quartz, consumers have been focused on buying more fashionable and casual sportswear as opposed to performance related products. This is an area that Adidas has clearly succeeded in with its Adidas Originals line, as well as partnerships with many celebrities to bring more fashionable products to consumers.

Is Adidas In Line With its Competitors?

Although Adidas has performed seemingly well over the year, it seems as though Nike just might be catching up to its rival on its own home turf. After Nike reported better than expected earnings and revenues and announced a $15 billion stock buyback, shares of the company soared to a new high.  Under Armour has also seen an increase in revenue, especially from apparel and footwear, according to its latest quarterly report. But, Adidas has an edge over its competitors, as it creates products that are in high demand from consumers.

According to Forbes, Adidas has been successful in designing on-trend silhouettes, as well as signing with key athletes and celebrities to elevate the brand. They have created a trendier look for their brand, which consumers are more attracted to nowadays.  We have seen an increase in sales for these specific brands like Adidas Originals because it has become popular amongst customers, as they want fashion over athleticism now.

The company has the potential to continue with strong sales, seeing its popularity not only in North America, but other large markets as well.

Bottom Line

Adidas is a proven strong contender in its industry and has been doing well over the past year. Even though its competition is stiff, investors will want to look forward to seeing if the company reports increasing revenues and growth in its upcoming quarterly report. Investors will be eager to learn how the company has done over the past few months, especially with the World Cup and many other brand enhancements.

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