Nike takes on Adidas in Brazil World Cup

Germany versus the US in Thursday's World Cup clash could have been a proxy for football's biggest commercial battle this summer - Adidas's relentless struggle with Nike for the hearts, minds and wallets of the fans.

On the pitch, they were both winners. Germany prevailed 1-0, but the two teams went through to the next round.

Brazil 2014 is turning out like that for the two sportswear giants, as the rising tide of World Cup euphoria lifts all boats. Oregon-based Nike scored a winning set of earnings on Thursday, despite soaring expenses relating to the tournament.

Sales related to Nike football products jumped 21 per cent in 2014 to $2.3bn in its latest financial year, and the group believes much of that drive is thanks to the number of high-profile teams and star players within its sponsorship stable.

"More World Cup players are wearing Nike than all other brands put together," said Nike brand president Trevor Edwards on a conference call this week.

Bavarian-based Adidas, a Fifa sponsor, is predicting €2bn sales from football in 2014, up from €1.7bn in 2012 and €1.5bn in 2010 when the World Cup was played in South Africa.

Herbert Hainer, chief executive, is expecting 8m shirt sales, compared with the 6.5m sold in 2010. Its brazuca, the official match ball, is heading for 14m sales, compared to 13m for the 2010 jabulani ball.

But this is no football friendly. Nike is determined to outflank its German rival to become the world's leading football brand, and Mr Hainer is under pressure from shareholders over how to halt the Nike juggernaut.

Adidas, which updates investors next month, highlighted the strength of sales in Latin America and of its brazuca twitter handle, which has 2.4m followers. Meanwhile smaller players like Puma have attracted attention with their eye-catching, contrasting coloured boots.

But Nike is also on its game, and has Brazil's national team, with its golden boy Neymar, on its side. It boasts strong growth in its social media football platforms and 380m views for its three video promotions.

Revenue for the three months to May 31 rose 11 per cent to $7.4bn, fuelled by strong sales of Nike apparel and footwear in North America and western Europe. Net income from continuing operations increased by 3 per cent to $698m, or 78 cents per share, beating Wall Street forecasts.

The Nike/Adidas battle has been going the American company's way, according to Tim Crow of brand consultants Synergy.

"Nike has been eating Adidas's lunch all over the world for a long time now," he said. "It certainly appears Nike is going to overtake Adidas as a football brand before too long. It is a question of when, not if."

Geographically, the strongest gains remain in mature markets such as North America, which generates 40 per cent of Nike sales despite an increasingly competitive environment, and Western Europe, where fourth-quarter revenue grew by 18 per cent.

Nike said "futures orders" of overall merchandise for between July and November were up 11 per cent, suggesting that World Cup momentum might linger long after the end of the tournament.

The measure is closely watched because investors view it as a proxy for future sales.

Before Nike's results were released, its shares had fallen 2.4 per cent this year, trailing the 5.8 per cent increase in the S&P 500, but better than the 21 per cent slide in Adidas stock. Nike shares were up 3 per cent to $79.35 in premarket trading on Friday. Adidas shares were up 0.6 per cent at €73.31 in lunchtime trading.

"Nike didn't get football for a long time and worried about it," said Mr Crow. "Then they realised that the 15, 16 or 17-year-old boy who was at the epicentre of Nike marketing wanted brilliant and entertaining football."

Nike began the tournament with 10 teams and global stars Cristiano Ronaldo of Portugal, Neymar and England's Wayne Rooney as its prime ambassadors. Adidas, which extended its Fifa sponsorship to 2030, had nine teams, plus Argentina's Lionel Messi and Uruguay's Luis Suarez.

With the first round now complete, they each have five teams left, and only Neymar and Messi of their respective stables of ambassadors are still in the tournament.

A final pitting Brazil (Nike) against Argentina (Adidas) would be a fitting climax not just on the pitch but in the retail stores.

© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation