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'That's all you see me rock! Nikes and Adidas, Nikes and Adidas, Nikes and Adidas,' – lyrics from ‘Nikes & Adidas’ by D Chamberz and Bill Collector.
Nike and Adidas have been entangled in an incessant battle that has dominated the sporting goods industry throughout the modern era. Financially, Nike is much larger than Adidas, but the latter’s performance has been better over recent years.
Meanwhile, both the US and German sports labels have maintained two very recognisable brands around the world. According to the Interbrand Top 100 Global Brand Report for 2017, Nike was number 18 on the list, compared to Adidas at 55.
So what has been different about Nike and Adidas in the past, what paths are they each heading down now, and what is in store for the pair and their share prices going forward?
A brief history of Nike: ‘Just Do It’
The company was founded by two individuals named Bill Bowerman and Phil Knight in Oregon, US, the inspiration for the company’s creation being to design better footwear for athletes. The firm was originally named Blue Ribbon Sports, before becoming the Nike the world knows today back in 1971.
The business only had one shoe and one t-shirt within its portfolio in the initial years, but now sells thousands of sporting products in about 170 countries spanning around the world.
A brief history of Adidas: ‘Impossible is Nothing’
The business was founded by a German named Adi Dassler in 1924, when he operated the company out of a wash room and registered the name ‘Gebrüder Dassler Schuhfabrik’. However, Dassler started fresh in 1949 with a new name, ‘Adi Dassler adidas Sportschuhfabrik’, and focused on footwear by registering the famous three-stripe design that Adidas still lives by today.
The business remained run by family until 1987, and almost went bankrupt in 1992 before Robert Louis-Dreyfus took over the helm in 1993 to mark a new beginning for Adidas. The firm now sells over 850 million products each year in 160 countries.
What products do Nike and Adidas make?
While both Nike and Adidas make the vast majority of their money from their core brands, the pair have other brands which help supplement earnings. As well as the Nike brand, the company owns Converse, Hurley, and the Jordan brand (after basketball player Michael Jordan), while Adidas also owns the Reebok brand.
All of Nike’s brands generated $34.4 billion in total revenue in the last financial year (running to the end of May 2017), while Adidas reported annual revenue of 19.2 billion euros in the last financial year, which matched the calendar year of 2017 (all charts below are based on these financial years).
For Adidas, the core brand accounted for $19 billion of total revenue to serve as an explanation for over 91% of the company’s total revenue in the last financial year, while Reebok generated $1.8 billion.
Both companies sell three types of products. Nike and Adidas make the majority of their revenue from selling footwear, with apparel being the second biggest revenue driver for both. This is followed by sporting equipment such as balls and bags.
What products drive revenue for Nike?
Compared to its German competitor, Nike’s revenue is slightly more weighted toward footwear.