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2026 World Cup: an open goal for adidas

Jul 23, 2018 United States
2026 World Cup: an open goal for adidas
The major competition for football national teams in 2026 will take place in North America and is likely to boost adidas’ sales closing the gap with Nike
On the 13th of June, FIFA awarded the 2026 World Cup to a joint bid from United States, Canada and Mexico. This assignation could be a boost for German apparel brand adidas, according to a 26-page report by Andreas Inderst, Macquarie’s lead analyst on the stock.

Inderst states that 2026 World Cup "has signifi??nt strategic value and is an open goal for adidas" to further boost its soccer apparel sales. As a matter of fact, while Macquarie reports that as of July 2018 adidas is leading the football market with 29% market share as compared to Nike’s 26%, the situation for the global sportswear market is reversed. According to 2017 data from Euromonitor, Nike has a global market share just below 16%, whereas adidas’ is around 11%. This is why, although Inderst does not say the event will allow adidas to catch up to Nike in glob?l sportswe?r m?rket sh?re, he still stresses it will help the Germ?n brand close the g?p.

Inderst compares its predictions for 2026, to what happened when the US hosted the World Cup in 1994. “As hosting the World Cup tournament in 1994 kicked off a surge in participation and interest in football in the US, we expect another leap and unprecedented attention to the sport. This should raise the profile of US football dramatically and therefore boost football participation and sales in the US (and the culture around the game)”. Indeed, in his note Inderst points the attention to the fact that while global football is by far the world’s most popular global sport, it’s behind a number of other sports. He explains that "as the US is ? lot about other team sports than football, this has been ? key disadvantage to adidas in contrast to football frenzied Europe and Latin America". This event could thus be the occasion for this distance to be reduced. Undeniably, while Nike is sponsoring the US team, adidas will be sponsoring Mexico, which is co-hosting the event and has the support of much of the large Hispanic population in the US.

Finally, Inderst reports that the beneficial effects for adidas will not only be limited to football-related products: “These activities and a likely significant rising popularity of football should allow ADS (Adidas) to get more embedded into the US sports culture, and further enhance its selling space in the sporting goods channel. This should improve its football sales by 2026, but also lead to halo effects in training, supporting sales strongly in the US by 2026 and beyond.”

Macquarie reiterated the company’s Outperform rating with a price target of 240 euros.

From Investopedia: Outperform is when an investment is expected to perform better than the return generated by a particular index or the overall market. Since the performance of many investments is compared to a benchmark index, outperform refers to a higher return on an investment than a particular benchmark over time.

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