Adidas's basketball shoe business had a stunningly strong quarter

Sportswear and apparel brand Adidas (ADDYY) released its Q2 earnings, and despite revenue growth of 4% on a currency-neutral basis, the company's earnings came in slightly below than consensus forecasts. However, one area where the German sportswear giant made unexpectedly impressive gains was in the basketball market.

Adidas CEO Kasper Rørsted confirmed that despite a 2% decline in the sports performance category, the brand saw double-digit gains in its training and basketball sectors. This news came as a surprise to many, including analysts on the call since through Q1 2019, performance basketball shoe sales in the U.S. were down 20%.

Adidas’s growth in basketball sneakers is due in no small part to consumers in China, according to Matt Powell, NPD Group vice president, and senior industry advisor.

“There are the only two countries in the world that do any substantial basketball shoe business,” Powell said to Yahoo Finance. “The Chinese basketball business is almost as large as the U.S. basketball business. And every indication is that the basketball business in China is still growing versus not growing here in the U.S."

Rørsted echoed this sentiment. He said that Adidas's basketball footwear and apparel business is indeed growing in North America and China, with about 90% of all basketball-related sales happening in those two regions.

An Adidas logo is pictured on a basketball after the annual news conference at the company's headquarters in the northern Bavarian town of Herzogenaurach, near Nuremberg March 3, 2016. REUTERS/Michaela Rehle

While pleased with the results in the basketball category, Rørsted is keeping the gains in perspective.

“While the business is still small, it's a good sign direction that we're seeing and continued pickup of our products in a market that we've not seen a lot of growth in the years,” Rørsted said. “So no doubt we gained market share in this quarter, but of course, we need to continue to expand our business."

Despite Adidas's gains in the category, Powell does not see basketball or any other sports sneaker performance category coming back to prominence in the U.S. anytime soon.

“I don't see any performance category returning to fashion in the U.S. whether it's basketball, running, or training,” he said. “They're all riding pretty negative right now. I don't think it's about signing an athlete or developing a product. Uh, I think kids are just saying, I want to wear athleisure footwear.”


Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.

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