Adidas, Puma eye running shoe revival as tariff threats loom

[LONDON] Running could turn around the fortunes of Puma and Adidas as they look to make up ground lost to new upstarts before US tariffs start to bite.

The German sneaker makers are renewing their focus on running shoes to drive growth after losing market share in the category to smaller rivals such as Deckers Outdoor-owned Hoka and Roger Federer-backed On Holding. Reviving demand is seen as critical for the companies, whose share prices have been battered in recent months, to cushion the impacts of potential US tariffs on key supply hubs.

Running is “the most exciting category for growth over the coming quarters as well as this one”, said Deutsche Bank analyst Adam Cochrane, pointing to demand from serious runners, casual shoppers in search of comfortable soles and fashion-forward consumers seeking a unique silhouette alike.

Although running has always been an important avenue for innovation across the sportswear market, Bavaria-based giants Puma and Adidas have not focused on the category “as much as they should have” in the last five years, Cochrane said. Instead, they focused intensely on lifestyle shoes, creating an opening for new running shoe brands such as Hoka.

Puma’s shares have fallen 48 per cent to the year, whereas Adidas is down 10 per cent. Puma declined to comment ahead of the publication of its second quarter earnings on Jul 31. Adidas, which is set to report on Jul 30, did not respond to a request for comment.

Rejuvenating its running franchise could help Puma elevate the brand, according to Cochrane. The Nitro line in particular, which was released in 2021 and features soles injected with nitrogen gas for added bounce, could be at the heart of new chief executive officer Arthur Hoeld’s strategy.

Adidas cannot ignore running, either. Interest for franchises including its popular Terrace line is waning, while other retro models such as Superstar and SL 72 lack momentum, a Barclays analysis of Google Trends data shows. Running shoe lines such as the adizero and EVO SL, however, show “strong momentum”, according to Barclays analyst Carole Madjo. Those offerings could in turn could appeal to lifestyle shoppers and gain traction outside of athlete circles.

Record-breaking performances by athletes donning Adidas gear and engagement on the company’s Instagram account dedicated to running are boosting the brand’s relevance in the running segment, which could provide the next leg of growth and lift margins, Cochrane said. Adidas is likely to upgrade its profit target when it reports later this month, he added.

US rival Nike has faced similar headwinds. The company signalled its sales decline hit bottom after bringing back longtime executive Elliott Hill as CEO to turn around the brand by improving relationships with retailers, investing in product development and placing a renewed focus on sports after an overemphasis on lifestyle footwear.

Running has performed especially strongly for Nike, with its Vomero shoes seeing growth across all geographies, according to Citigroup analyst Monique Pollard.

Companies such as Nike and Adidas could also benefit from China’s National Fitness Plan, which aims to promote exercise and could lift sportswear sales in the country, according to Bloomberg Intelligence analysts Catherine Lim and Trini Tan. “These companies could sell pricier gear and increase sponsorship of athletic events to capture rising per-capita spending on sportswear in China,” they wrote in a note.

Tariff risk

Tariffs continue to loom over the outlook for sportswear giants, raising costs as they adjust supply chains. A recent trade deal with Vietnam, a critical production hub for those companies, resulted in a higher-than-expected 20 per cent levy on goods from the country, which is likely to force Nike to hike its prices, BI’s Poonam Goyal and Sydney Goodman said.

Further plans by US President Donald Trump to impose a 36 per cent tariff rate on Cambodia and Thailand, as well as a 40 per cent levy on Laos, all key supplier countries to the fashion industry, sent Puma and Adidas shares lower when announced. The new duties are set to come into effect on Aug 1.

Doubling down on running shoes could prove a smart bet for the future. “Once the tariffs are confirmed, there will be a price and profit impact, but once digested, we will look back at sales growth to drive earnings and running will be an important part of that,” Cochrane said.

“As the bigger brands start to get more traction in running, it will help improve investor sentiment on these names.” BLOOMBERG