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The early returns are positive. In the U.S., Adidas' soccer-footwear sales are up 23% over last year. Globally, Adidas "has production problems right now, demand [for the Tunit] is so high," says Klaus Filbry, head of soccer for Adidas America. A starter kit, including one set of uppers, an insole and three sets of studs, costs $170, but the real revenue potential for Adidas, and retailers, lies in the add-ons: $80 for each extra upper and $40 for an additional insole. Adidas is about to launch 32 new uppers, with the colors and imprints of each World Cup nation--bright orange for the Netherlands, green and white for Iran--in the hope that they become collector's items. "There are endless opportunities for upsell," says Dan Manson, president of Soccer Post, a U.S. specialty soccer retailer. Manson calls the Tunit his hottest product.
Although the Tunit should help Adidas, some investors fear that getting a much larger shoe to fit could distract the company from pressing the advantage in soccer: its $3.8 billion purchase of Reebok, the struggling Canton, Mass., sporting-goods company. Although the merger helps Adidas gain market share and nudge closer to Nike overall, right now it's a drag on earnings: Reebok's orders declined 22% in the fourth quarter of 2005 owing to weak products and anxiety about Adidas' strategy for the brand. "Mind boggling," says John Shanley, an analyst at Susquehanna Financial Group.
Turning Reebok (2005 sales: $3.8 billion) around is a daunting task, one that some feel Adidas shouldn't have taken on. "Reebok is a brand you can probably develop, but it's going to cost time, and it's going to cost money," says Joerg-Philipp Frey, an analyst at Bank Sal. Oppenheim in Frankfurt. "Why should Adidas have to do that? They're better off concentrating on their own brand." To Adidas' Stamminger, two brands offer more leverage than one. Reebok also gives Adidas another weapon that Nike has to fend off. "There's a potential in this market that we are not utilizing at the moment," he says. "And just bringing Reebok back, with the strength they had, that's a huge potential." The company is forecasting $223 million in cost savings and $636 million in additional revenues by 2009.
Reebok has already scored for Adidas in soccer. In April the company signed French superstar Thierry Henry, a veteran Nike pitchman, to an endorsement deal.
Adidas has drawn the battle lines; now it's up to the consumers to decide. Not that the companies will quiet the trash talk. For example, Adidas puts the boot to Nike's worldwide youth "futsal" tournament, which features the smaller soccer ball that many great players, like Ronaldinho, grew up dribbling. "It's three on three in a cage," says Filbry. "That's not soccer." Edwards, Nike's marketing guru, guffaws. "I'm happy they would dismiss something that millions of people around the world are playing," he says. On the eve of the World Cup, jawing between the world's top players has begun. May the best brand win. Adidas vs. Nike
Revenue, 12 months Adidas - $9.5 billion Nike - $14.7 billion Net income, 12 months Adidas - $537 million Nike - $1.4 billion
Market capitalization* Adidas - $11.2 billion Nike - $21.3 billion
One-tear change in stock price* Adidas - up 34% Nike - up 5.9%