Adidas vs. Nike vs. Under Armour: Stocks Compared

Adidas AG (ADDYY), Nike Inc. (NKE), and Under Armour Inc. (UAA) are three of the largest retailers in the highly competitive athletic apparel industry.

Sportswear companies make and sell clothing designed for athletes and people with active lifestyles, including running shoes, shorts, T-shirts, tracksuits, swimsuits, and more. The global sports apparel market was valued at $425 billion in 2022, the latest year for which figures are available, and is expected to grow to $636 billion by 2028.

The early stages of the COVID-19 pandemic hampered the sales of many sportswear companies, but athletic apparel in particular was more resilient than the broader apparel industry.

^{Source: YCharts as of Dec. 13, 2021}

Adidas AG (ADDYY)

In late October 2022, Adidas terminated its partnership with Ye, formerly known as Kanye West, over the rapper’s antisemitic remarks.

Adidas and Ye had partnered for nearly a decade to produce the popular Yeezy line of products. The company’s decision came after Ye had publicly stated that he could make antisemitic comments and that “Adidas can’t drop me.” In the nine days following this remark, Adidas faced mounting pressure from customers, legal organizations, and anti-racism groups to cut ties with the rapper.

Adidas said that its decision to cancel its partnership with Ye would lead to an expected negative impact to net income for 2022 of up to €250 million (about $264 million). The deal with Ye is estimated to have generated $697 million a year for Adidas. Despite dropping the partnership with Ye, Adidas asserted that it is the sole owner of all design rights to existing Yeezy products, leaving open the possibility that it will continue to develop the product line independently. Indeed, in late February 2024, Adidas announced plans to sell its remaining Yeezy sneakers “at least at cost.”

A decline in income due to the cancellation of the Ye partnership is one of several headwinds that Adidas has faced. The company said in its third quarter (Q3) 2022 fiscal report that consumer demand in Western markets had slowed amid inflation. COVID-19 restrictions in China, in place much longer than in many other markets, depressed business. Product takebacks in China more than offset a 7% increase in retail revenues, leading to a revenue decline of 27% for Adidas’ Chinese business in Q3.

Still, Adidas has said it expects strong improvement to net income. The company has posted double-digit growth in its ecommerce business across EMEA (Europe, Middle East, and Africa), North American, and Latin American markets. And Adidas got a boost to its Football segment revenue from the FIFA World Cup in late 2022.

Nike Inc. (NKE)

The pandemic drove Nike to accelerate its pivot toward its ecommerce channels. Nike had already been investing in its online direct-to-consumer business prior to the pandemic. As a result, the company was in a stronger position than many rivals to ramp up ecommerce sales when the pandemic began.

This has been reflected in results. For the company’s Q2 fiscal year (FY) 2023, ended Nov. 30, 2022, it reported a 25% year-over-year (YOY) improvement in digital sales for its Nike brand. This helped to drive overall reported revenue growth of 17% for the quarter, or 27% on a currency-neutral basis.

Nike’s performance in the related quarter surpassed expectations. Although net income was flat YOY, it was much better than the anticipated 23% decline in this area that analysts had forecast. The company also increased its guidance for full FY 2023 and expects revenue to climb more than 10% on a currency-neutral basis. The company’s stock bumped nearly 13% following its earnings release.

Nike’s digital offerings surpass those of many competitors. The company has explored the metaverse by launching a virtual space called Nikeland with Roblox, in which users can buy virtual Nike products. In late 2022, the company launched .SWOOSH, another virtual marketplace that will allow users to design sneakers along with Nike staff and potentially provide royalty cuts for members. And the company has opened its first Rise concept store in North America. Rise is a hybridized in-person and digital experience providing online-to-offline services and virtual platforms.

Though there is much fueling Nike’s recent growth, the company also faces numerous challenges. Like many retailers, Nike has wrestled with inventory backup as a result of broader supply chain and shipping concerns. Similar to Adidas, Nike has also seen sales struggle in Greater China, with YOY declines in apparel and equipment revenue for the region.

Under Armour Inc. (UA)

The pandemic also hurt Under Amour in 2020, with its annual revenue declining 15%. Like Adidas and Nike, the company’s ecommerce sales helped to mitigate the impact of store closures. Under Armour’s ecommerce sales grew 40% during the year. Its fourth-quarter earnings per share (EPS) exceeded analysts’ estimates by 300%.

Growth has decelerated in the company’s ecommerce area. For Under Armour’s Q2 FY 2023, ended Sept. 30, the company said that ecommerce sales climbed by only 4%. In its earnings release for that period, Under Armour stated that it expects revenue to grow by a low-single-digit percentage rate for FY 2023, down from its earlier estimate of 5% to 7%.

Like Nike and Adidas, Under Armour has faced challenges associated with inflation and dampening retail sales. The company also disclosed in August 2022 that promotions on its athletic apparel had weakened its margins.

The company dealt with leadership transitions as its founder, Kevin Plank, said that growth was slower than hoped for. Its top executive, Patrik Frisk, resigned unexpectedly in May 2022. Chief Operating Officer (COO) Colin Browne then served as interim president and CEO of the company.

In late December 2022, it was announced that Under Armour had tapped Stephanie Linnartz, former president of Marriott International, to be its next leader effective in late February 2023. Linnartz was seen as a digital leader, and her appointment suggested that Under Armour would continue to focus on building its ecommerce business. However, in mid-March 2024, Linnartz was replaced by Plank.

The Bottom Line

Adidas, Nike, and Under Armour have seen their business operations rebound from pandemic shock. All three have since dramatically expanded their ecommerce sales and continue to recover despite major supply chain disruptions, weakening retail due to inflation, and other macroeconomic concerns.

In the case of Adidas, negative associations with one-time collaborator Ye may impact consumer or investor opinion of the brand, and severing ties with the rapper could cost the company hundreds of millions. Nike has seen some success in building out its virtual offerings, including expanding into the metaverse. And Under Armour is in the midst of a leadership transition that could see the company redouble its digital efforts as well.