Adidas plans to expand Yeezy, Parley for the Oceans, Ultraboost franchises
today Aug 30, 2018
Adidas will be investing more on Yeezy, as Kasper Rorsted, the German sport group’s CEO, hinted during a conversation with financial analysts in August. After detailing Adidas’s product plans for the coming months, Rorsted spent some time on the partnership with one of the leading names on the US hip hop scene.
“Finally, I’d like to mention our partnership with Kanye West. It is now three years since we introduced the most significant collaboration ever established between a sport brand and a celebrity who’s not a recognised athlete. Together, we created a new, powerful brand experience, uniquely embodied in some of the most coveted trainer models ever, the fastest-selling in the history of the industry. We are delighted to carry on with this partnership and to keep venturing into new territory together,” said Kasper Rorsted. “Kanye has said several times he would like to make the Yeezy brand more universal. We share this aspiration, and we’re working hard to realise it. Stay tuned!” added Rorsted.
In the last few months, Adidas has had to handle a series of sensational statements by Kanye West, who said he earns more money on trainers than Michael Jordan, or that he sold 400,000 pairs of Yeezy shoes in a few hours. At the time, the German group was careful not to react to West’s statements, and Rorsted, talking to CNBC early in the year, simply said that “no doubt Yeezy has a crucial influence on our brand’s global position, but within the broader context of a $25 billion corporation, it represents only a small part of our business.”
Adidas appears to have now given the green light to a project designed to boost the importance of the Yeezy franchise. Nevertheless, the sport and lifestyle giant, whose US performance is enabling it to gain some ground on Nike, as it did in the last quarter, has released no details about Yeezy’s output and sales figures.
As well as the intention to broaden the Yeezy range, Adidas highlighted several other initiatives it is working on. It announced its firm plan to use recycled polyester only from 2024, stating that more than a million products have been manufactured using this material following the group’s agreement with the Parley For the Oceans association.
“As for the initiative with Parley, we are clearly upsizing. Not so long ago, [the output] was 100,000 units. Last year, it was 1 million. This year, it will be 5 million, more than what some footwear brands produce altogether,” said Rorsted. “There is a ceiling which is currently in part due to the supply chain. It’s not just a matter of collecting [used] plastic, but also of producing plastic using an existing raw material. The next step will be to manufacture two million garments. It started with swimwear, and it will continue with jackets. If you follow football, you’ll know that both Manchester United and Real Madrid have launched a Parley for the Oceans kit. Parley is turning into a significant franchise for us, one that is absolutely unique,” said Rorsted.
It is newly developed lines like these, or like the NMD, Deerupt and EQT lines, which are ensuring Adidas’s smooth transition into more success, following that of the Stan Smith and Superstar models, which have been driving the group's growth in the last few years. About this, Rorsted said that the challenge for Adidas is to take care in how it handles best-selling models like the latter two: “During the last 18 months, the Stan Smith and Superstar [models] have been carefully controlled, without this affecting our sales. Each of them currently accounts for only a few percentage points of our overall sales. The volumes we put on the markets are healthy. There actually is more demand [for them] now than we are willing to meet. Indeed, the Stan Smith and the Superstar continue to be prime examples of how you manage a product’s life cycle with discipline. And you can expect us to manage other lines which have reached maturity in an equally prudent fashion.”
To eventually replace them, Adidas is relying on its sport-inspired urban line POD System, which it promotes for example in France by associating it on social media with rapper Sofiane, or the Falcon line, for which Adidas poached Puma’s brand ambassador, Kylie Jenner.
A model for which Adidas has very ambitious plans is the Ultraboost. “During the last three years, we have built it into one of the industry’s most active franchises. A success which continued in the last quarter, with a growth of nearly 50%. We are far from saturation for this line. In July we refreshed the Ultraboost seasonal collections, and the first collaboration with streetwear label A Kind of Guise sold out immediately. In the course of the year you will find out about other collaborations, leading to the launch of the new Ultraboost generation at the start of 2019, the next step in the growth of the line, taking it towards the €1 billion revenue threshold,” said Rorsted.
A major milestone, considering that, in the 2017 financial year, footwear accounted for €12.4 billion out of a global revenue of €21.2 billion for Adidas.
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