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Adidas Lowers It's Yearly Outlook Based On Turmoil In Russia
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Here’s Why Adidas Is Scoring a Comeback in the U.S.

May 04, 2016

Two years after stumbling badly in North America, Adidas says it is notching a big win in the competitive sports gear market.

The world's second largest athletic-gear maker reported impressive first-quarter results to start off the year, with net sales rising 22% on a currency-neutral basis in North America from a year ago. That's a big increase from the 7% jump posted a year ago, and an even steeper turnaround from the 20% decline in 2014.

The namesake Adidas brand fueled the sales jump, up 31% and offsetting some softness for the sibling Reebok brand. That growth outpaces the most recent results from top rivals Nike (nke), which reported a 14% jump for its most recent quarter while Under Armour (ua) posted a 25.7% increase in North America.

Mark King, president of Adidas Group North America, tells Fortune that there are several reasons why the brand is resonating again. Footwear sales soared 54%, helped by increases for running and the smaller baseball and football categories.

"Success starts from the feet up," King explains. He said for running, which grew by 30%, the Ultra Boost line was an especially strong seller. Retail data from The NPD Group also indicates Adidas is growing faster than Nike and Under Armour within running, though it is important to note that Nike still commands nearly 60% of the market share (while Adidas only has 5% and Under Armour just 3%).

Broadly, brands are benefiting from increased interest in sports gear–worn not only for working out but for day-to-day activities. Athletic gear should continue to outperform the broader apparel/footwear market this year as the Summer Olympics give Adidas, Nike, and others even more marketing opportunities for their brands. The sales success has led to some copycats, most notably from fast-fashion chains, and in the category's strength hasn't always extended to retailers. Most notably, Sports Authority has struggled.

King says he isn't worried about the bankruptcy of Sports Authority and a few other smaller, regional sports gear retailers. He says Adidas still has strong support with Dick's Sporting Goods (dks), Foot Locker (fl), and other key retail partners. Adidas added 700 branded space across retail channels last year and is planning to increase its presence by an additional 1,100 this year.

That means Adidas will have a greater retail presence than ever before.

Also helpful: partnerships with rapper Kanye West and other influential artists that help elevate the "cool" factor. While those relationships don't drive a ton of product volume, they create a halo effect.

There's also been some big notable athlete endorsement deals that King called out, including deals last year with NHL Pittsburgh Penguins star Sidney Crosby and NFL Green Bay Packers quarterback Aaron Rodgers.

"Americans like winners, we needed to not just have athletes but the best athletes," King says.

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