The success of Adidas’ low-rise multi-colored Samba and Gazelle sneakers, coupled with weaker sales at Nike, is poised to boost the German sportswear giant’s second-quarter performance. Analysts predict Adidas will achieve a profit margin of 51.4%, the highest in three years, supported by a 4.5% rise in revenue, reaching 5.6 billion euros ($6.1 billion).

In contrast, Nike reported a surprising decline in projected annual sales at the end of June, causing shares to drop by 20%. Analysts argue Nike’s lack of recent innovation has allowed competitors to gain ground. Cedric Rossi, a next-gen consumer analyst at Bryan Garnier, highlighted the stark contrast between Nike’s situation and the broader industry landscape.

Adidas, on the other hand, continues to capture consumer interest with its strategic release of new colors and limited editions of its three-striped classics. Google Trends data reveal a surge in searches for “Adidas Samba,” outpacing “Nike Air Force 1” fluctuations since last December.

Simon Irwin of Tanyard Advisory points out that Adidas is leveraging Nike’s missteps, but cautions against assuming a full return to high margins, citing increased competition and softer demand in China. Emerging brands like Hoka, Lululemon, New Balance, and On Running have expanded their market share from 20% in 2013-2020 to 35% in 2023, according to RBC.

Adidas strengthens its wholesale relationships under CEO Bjorn Gulden, contrasting Nike’s shift to direct-to-consumer sales. Analysts anticipate a management overhaul at Nike, particularly with its upcoming investor day in the fall. The upcoming Euros soccer championship is expected to further boost Adidas’ market presence in Europe.