Adidas AG expects to increase its North American sales nearly 50% by 2020, a sign of optimism for the German sportswear company that has long struggled behind Nike Inc. in the region.
Continue Reading Below
The EUR5 billion ($5.32 billion) forecast for sales in North America in 2020, up from the EUR3.41 billion in sales rung up in 2016, is Adidas's first 2020 geographic revenue target, announced during a presentation to investors on Tuesday. The company is also projecting total global revenue of EUR25 billion to EUR27 billion for the same period, up from EUR19.3 billion last year.
It was another upbeat disclosure from Adidas following its remarks last week that it expects its profit and sales to rise despite challenges roiling the sportswear market, such as the shift from performance-focused gear toward more casual looks. Over the past 2 1/2 years, Adidas has restructured its management, replaced its chief executive and renewed its focus on the world's largest sportswear market, the U.S.
"For 10 to 15 years we did not make sustainable progress in the U.S. We had good years, we had bad years, we had inconsistent years," said Kasper Rorsted, who in October took the helm as CEO. "We were unclear where we wanted to take the company."
Mr. Rorsted said Adidas still isn't pleased with its position behind Nike, particularly in the U.S., where its sales gap is especially pronounced. Beaverton, Ore.-based Nike reported North American sales of $14.8 billion for the year ended May 31, 2016, and projected sales in the region to hit $20 billion by 2020.
Adidas, based in the small Bavarian town of Herzogenaurach, has in the past faced criticism for being too focused on German sports and culture, particularly soccer.
Continue Reading Below
One subtle indication of the company's tilt toward the U.S.: Mr. Rorsted tends to stress the second syllable of Adidas, similar to how most Americans pronounce it, as he did several times in Tuesday's presentation. European-based Adidas employees generally pronounce it the German way, emphasizing the last syllable so that it rhymes with "gloss." The company takes its name from a portmanteau of its founder's name, Adi Dassler.
Asked in an interview about his Americanized pronunciation, Mr. Rorsted said, "I have spent so much time in the U.S., and that's how you say it in the U.S." Mr. Rorsted is Danish but was educated at Harvard Business School and has worked for such American companies as Hewlett-Packard and Compaq.
When it comes to pronunciation, an Adidas spokeswoman said that "the most important thing is to create brand desire, and how people pronounce our name is secondary."