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Can Sportswear Players Come Out Strong in 2018?

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Adidas and Puma’s increasing presence in the US fueled competition in 2017

As we discussed in the previous part of this series, the Germany-based Adidas (ADDYY) and Puma are giving a tough time to US sportswear companies on their home turf.

Adidas, in fact, overtook Nike’s (NKE) Jordon Brand in 2017 to acquire the number-two position in the US sneaker market. The footwear giant is now targeting expansion of its US market share from the current 10% to 15%–20%.

Both Nike and Under Armour (UAA) announced restructuring plans and workforce cuts in 2017. Adidas, on the other hand, more than doubled in the workforce at its North American headquarters from 800 to 1,700 workers.

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“Adidas remains the hottest brand in the U.S. active market,” said NPD Group’s Matt Powell. “They are still growing at a very quick pace, most of the other brands in the category are not growing at this point, so it is logical they are adding to the workforce, but Nike and UA are struggling in sales and both are reduce staffing.”

Puma also had a terrific 2017 and recorded double-digit growth in all regions and product categories. It raised guidance three times in 2017.

Is a better 2018 waiting ahead?

Some Wall Street analysts believe the worst might be over for US sportswear players. “After a few quarters of disruption, which included customer transition from purely performance to a lifestyle-focus, we believe the athletic sector is now on more solid ground,” said Paul Trussell of Deutsche Bank in a client note in December.

Trussell also noted that the “pace of product innovation in apparel and footwear is accelerating,” and that the companies should now benefit from a “more controlled inventory environment” in North America. He added, “Our confidence level remains considerably higher heading into 2018 regarding future growth rates of athleisure than for other categories of apparel.”

Read the next two parts of this series to learn about Nike’s performance in 2017.

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