Sneakers: Athletic Shoes

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Sneakers: Revenue Information

As per your needs, we have provided the most recent sales figure for New Balance ($1.4 billion in 2017) in the United States. For the other sneaker brands: Under Armor ($3.8 billion in 2017), Nike ($9.6 billion in 2017), Adidas (€2.8 billion Euros in 2016), and Reebok (€514 million in 2016), we provided their recent sales figures for North America. This is because they were only available by region. Analyses of these sales figures were carried out for these brands based on their sales. Separately, we have also furnished you with some details on Puma's recent rise in sales as their sales increased by 11.6%, totaling €1.4948 billion.

For additional consumption, here is a link which contains a video that shows a comparison of Under Armor, Nike, Adidas, and New Balance in terms of market share.

Methodology

To come up with answers, we searched through recent press releases, annual financial reports, call transcripts, and data and statistics websites like Statista, we found that these brands categorize their financial information based on regions, i.e. North America, Asia, Europe, etc. Further search showed that New Balance though "secretive" is the only brand with information on the United States' sales which was the only source we got. We obtained them from a recent press release (just last month) on its financial growth. We tried a similar approach to get the United States' sales for the other brands but that was not successful. So, apart from the sales information of New Balance for the United States, we have also provided same information of the other brands for North America (the United States is in North America).

As mentioned, we have used data from statista.com but they are behind paywall. So we have provided you a screenshot of these data in source 13 (seen below after this research brief).

See our findings below.

Financial overview of the sneakers brands: Under Armor, Nike, Adidas, New Balance and Reebok

1. Under Armor

According to information from this source, North American net sales of Under Armour between 2013-2017 are as follows: $2.1 billion in 2013, $2.7 billion in 2014, $3.4 billion in 2015, $4 billion in 2016 and $3.8 billion in 2017. This shows that their sales in North America increased between 2013-2016 up until 2017 when it reduced.

Under Armour's performance in terms of sales in North America through 2015 and 2016 was strong and can be accounted for the fact that it rolled out its "first big signature sneaker for basketball star Stephen Curry." Through 2017, they experienced a decline in sales. A report has it that it was difficult for Under Armour to sell sneakers because the sales of basketball sneakers in the United States have declined and their best product by far remained its sneaker for Curry which was quite outdated (2016). Under Armour's subsequent and current editions of Curry, "Curry 3 was a flop" as such, sales of the sneaker plummeted. Another significant reason is Under Armour's difficulty in translating its expertise on performance gears for athletes into products people can casually wear outside of the gym.
"The results cast doubt on whether Under Armour can ever catch up to Nike and Adidas, which built their businesses on sneakers."
2. Nike

According to Statistica, the sneaker sales of Nike in North America between 2013-2017 are as follows: $6.7 billion in 2013, $7.4 billion in 2014, $8.5 billion in 2015, $9.2 billion in 2016, and $9.6 billion in 2017. A look at these figures shows that Nike performed strongly on a consistent basis from 2013 to 2016. Although it recorded an increase in sales between 2016 and 2017, the difference ($0.4 billion) was not much compared to the previous years.
Nike gained popularity at least in the United States by capturing the sneaker preferences of urban youths by releasing sneaker choices of Michael Jordan and Lebron James. "Nike has hit the wall, at least in the United States" due to her "losing ground with its core base" while Vans' streetwear, Adidas Supreme, Puma's and New Balance's sports performance wears are gradually picking up, according to a survey report. This is made evident in their $0.4 billion sales difference between 2016 and 2017 compared to the higher marginal differences between 2013 and 2014, 2014 and 2015, and finally between 2015 and 2016.

In response, Nike is expanding its partnership with the NBA, noting that it "is now in full force." They plan to roll out more performance-based sneakers like the KYRIE 3 and Jordan brands.

3. Adidas

The net sales for Adidas in North America were €2.2 billion in 2015 and €2.8 billion Euros in 2016. They recorded a 30% increase in sales.

German sportswear firm Adidas has stated that this 30% increase in sales is "driven by expansion in China and North America, where it has been taking market share from arch rival Nike." This is because customers prefer their "retro styles and lifestyle shoes instead of basketball and sports performance gears." Also, Adidas' acquisition of the Reebok brand has increased its sales by 23% in North America.
4. New Balance

While this source requires a subscription, we were able to catch a glimpse of the information before it went into payment mode. To that effect, we have provided a document containing screenshots of the information behind a paywall in source 15 (can be found below after this research brief). Also, we could not determine their sales figures for North America as we have for others. This is because they are adjudged to be "secretive" and they do not have to divulge such details because they are privately owned according.

New Balance recorded $4.5 billion in sales in 2017. It further revealed that 33% of New Balance's sales came from the United States while international sales make up a total of 67%. So, to get the sales for the United States, we calculate as follows:
33% of $4.5 billion = (33/100) * $4.5 billion = $1.4 billion.

New balance's expansion of their e-commerce operations and international presence has been reported to be the major reason behind their strong performance in sales. They have invested in their e-commerce operations as well as built over 4,000 stores globally over the last six years. This has improved their global presence. Chris Davis, New Balance's CEO has said that the company is "experiencing a monumental shift in the shape of their business." According to the NPD group, New balance ranked the "second-highest" growth rate, second only to Nike within the industry at 9%, although they rank 6th in the footwear brand industry in the United States.

5. Reebok

Reebok was acquired for $4 billion in 2005 "in an effort to gain ground on Nike." Since they belong to Adidas, it is expected that they synchronize their financial statements. Still, we managed to get some data pertaining Reebok from the Adidas group's annual report.

Net sales for Reebok in North America was €523 million in 2015 and €514 million in 2016. This represents a -2% drop in net sales leading to Adidas CEO planning to overhaul the struggling Reebok. To tackle this issue, Reebok has been improving its cultural relevance in 2017, by rolling out its Reebok Innovation Collective, which forms a platform for partnerships with style makers and designers. This has led to their partnership with New York City-based fashion retailer, Opening Ceremony.

Before we wrap up, let us provide you with some details on Puma's rise in sales.

Puma's recent rise in sales

The German sportswear brand Puma recorded a 12% increase in its sales and profit guidance in the first quarter of 2018 even though cautioned volatile currencies and the possible impacts of a United States-China trade war reduced its expectations. Moving away from these reasons, they expect sales to increase by a range between 10% to 12%, up from their initial projection of 10%. In its 2017 annual report, they recorded a "growth trend persistent for 14 quarters at the end of financial year 2017". Thus, their increase in sales in the Americas region is by 11.6%, totaling €1.4948 billion.

To wrap up, we have provided the most recent sales figure for the sneaker brands: Under Armor, Nike, Adidas, New Balance (Revenue) and Reebok; and analyzed their performance. Separately, we have also furnished you some details on Puma's recent rise in sales.
Part
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Part
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Sneakers, Athletic Footwear: Trends

The rise in the use of eco-friendly products, innovations in sole technology, and shoe-knitting technology are three technology trends in the sneaker industry. Also, growing preference for premium and customized products, the athleisure trend, and color trends are three style trends in the sneaker footwear industry. Below, you will find our research in details.

Tech trends in athletic footwear

Some technology trends in the athletic footwear industry are:
1. Rise in the use of eco-friendly products: In order to align with the global objective of preserving the environment, manufacturers have substituted materials such as synthetic rubber, nylon, leather etc with eco-friendly materials such as organic cotton, recycled rubber, and plastic materials in the making of sports footwear.

2. Innovations in sole technology: Innovative footwear manufacturing is a trend in the footwear industry. Athletic footwear designs are based on improving athlete's performance. Products that would improve athlete's performance are top of customers list and desire. This has led to top players in the market coming up with technological initiatives to enhance user's performance. This can be seen in the "use of polyurethane capsules in the manufacture of athletic footwear". The polyurethane capsules afford athletes the required buoyancy while running. Performance tracking sensors are also built into the sole of the footwear.

3. Shoe-knitting technology: Sneaker footwear knitting has been automated. "The shoe-knitting technology aims at creating snug fitting shoes, similar to that of a pair of socks". This reduces waste and requires less labor. Shoe-knitting technology is currently adopted in Nike's Flyknit and Primeknit by Adidas.

style trends in sneakers footwear

Some style trends in the athletic footwear industry are:
1. Growing preference for premium and customized products: Big retailers now request customized products from manufacturers. The premium payment associated with customization of footwear gives the customer a sense of satisfaction and comfort as expensive products are perceived to be more durable and of better quality. The use of 3D printing technology is also a current trend in the sneaker industry. Popular brands such as Adidas, Nike, and New Balance have adopted this technology to design "outsoles based on the digital model of the athletes' feet."

2. The athleisure trend: The sports leisure-oriented sneakers has become more prominent in the US compared to the performance-oriented footwear. This contrast can be seen in the varying level of demand for sports leisure-oriented footwear and performance-oriented footwear. While sports leisure-oriented footwear had a 17% growth in demand from 2017, performance-oriented footwear had a 10% decrease in demand in the US. The sales of running inspired and casual athletic style sneaker rose by 39% and 24% respectively, while the sales of performance-geared shoes and training sneakers dropped by 7% and 15% respectively from the previous year.

3. Color trends: According to five expert speakers on Coveteur, athletic footwear colors currently trending are the following: earth tones, animal prints, navy, beige, bone, Mondrian reds, blues, stark whites, and ultraviolet.

new brands

In the US, no new brand in the sneaker industry has shown any signs of wrestling the market from the top players in the market. Charts from 2016 to date has shown a strong foot-hold of Nike as the leading brand in the industry, with a significant lead over the chasing packs such as Adidas and New Balance as shown in a 2016 chart. However, in the course of our research, we came across brands such as Tapestry, Lululemon, Athletica, Balenciaga, Feetz, Zalando, Fabletics, 361 Degree, Topo Athletics, and Allemann as emerging brands. Though these brands are in the industry, they don't pose an immediate threat to the big guns just yet.

conclusion

To wrap up, we have identified a rise in the use of eco-friendly products, innovations in sole technology, and shoe-knitting technology as three tech trends in the sneaker industry. We also identified few emerging brands in the sneaker industry such as Tapestry, Lululemon, Athletica, Balenciaga, Feetz, Zalando, Fabletics, 361 Degree, Topo Athletics, and Allemann.
Sources
Sources