Now Is Not The Right Buy Nike Magista Shoes Online Time

Now Is Not The Right Time

2014 FIFA World CupAdidas (OTCQX:ADDYY) is the world's second biggest sporting goods maker and despite the price drop in terms of its stock investors are optimistic about the future of the company. Adidas' recent partnership with FIFA, organizer of the World Cup, in order to extend their commercial relationship to 60 years has been the main reason for investors' optimism. Adidas has been a FIFA sponsor since the 1970 World Cup and the partnership has been extended through 2030. The tournament is going to start on June 12th and Adidas will be the official supplier of match balls and uniforms to nine teams (including a newcomer Bosnia). It is expected that soccer sales would rise to record levels in 2014 and Adidas who is considered a leader in soccer sales will benefit from this. However, Nike will be there to pose a challenge to Adidas and try to increase its market share in soccer sales but Adidas has plans to deal with Nike's challenge. Adidas is going to launch a new soccer ball as the custom of launching a newer version every 4 years New Soccer Cleat For Sale. However while players complain about the difficulty of using a newly launched ball for the very first time in one of the biggest tournaments in the world customers don't care. Soccer lovers will definitely want to have the shirts and gadgets of their favorite players. Thus Adidas expects to see this market reach a record $2.8 billion (2 billion Euros) this year. The soccer kit market is also a battle field between Adidas and Nike and it is worth more than $5 billion per annum.

Digital Makeover to Original Fashion StoresAdidas is targeting 9% more stores in 2014 and is striving hard to enable its company-owned stores to generate more and more revenues for the company. The company's stores contributed around 24% of its 2013 revenues of $20 billion denoting 14.5 billion Euros. According to the company sales made through its company-owned stores generate more profits for the company than sales made through third party stores. This was evident in the company's shift from wholesale to retail business model as its gross margin increased from 1.5% to 49.3% in 2013 Nike Hypervenom Phantom Shoes For Sale. Unlike Adidas, Nike uses third party stores more than its company-owned stores. Nike's company-owned stores contribute less than 20% to the company's total sales and gross margin for the company stood at 43.6% in 2013. Adidas' revamped stores offer Wi-Fi equipped lounges and mobile charging points. This kind of digital makeover will persuade visitors to spend longer in the outlets and eventually the longer they stay the more likely they will buy.

Apart from the digitally revamped stores, Adidas intends to open 250 stores this year with a majority of them in Eastern Europe despite the fact that the company has a very large exposure in Russia with 1000 stores in the region. Recently the Russia-Ukraine crisis had a very bad effect on the company's stock price. Adidas expects the weakness of the Russian ruble and Argentine peso will affect its bottom line for 2014, severely driving down its profits to 17% below analysts' expectations. However, the stock price seems to have incorporated this news already as it is on lowest level of the year on March 24. Since then the stock price has increased by almost 4%. Adidas sources almost 75% of its revenues from geographies outside Western Europe and thus is highly vulnerable to exchange rate swings. In just one year its home currency the euro has advanced 24% against the ruble and 64% against the Argentine peso. Rising Russia-Ukraine tension has brought nothing but severity to the vulnerable condition of the company in relation to Forex.

Adidas - Pharrell Williams CollaborationAdidas has partnered with Pharrell Williams, Oscar nominated, Grammy award winner, and fashion designer for an eco-friendly clothing collection that will be launched in summer this year. This collection will incorporate Bionic Yarn that is a sustainable material spun from recycled plastic bottles. Pharrell Williams who inspires millions of people through his music is expected to bring innovation and creativity to Adidas Originals as well.

High Tech LabsAdidas has made huge investments in order to enhance its footwear and it has literally involved high tech labs for the purpose. Adidas is said to have spent almost $176 million on research and development and has equipped its lab with high tech equipment. With its "Spring Blade" and "Boost Shoes" Adidas is trying to catch a bigger slice of the highly lucrative running shoe market. The US running market is worth $3 billion a year and to grab a chunk out of it Adidas has spent years to come up with really innovative products. As a result its Boost Shoes was called best debut of 2013 by Runners' World magazine. Since the shoes have hit the market late last year their revenues are yet to bolster the company's top line over this whole year and beyond.

Although Adidas is improving the outer end of its products it also had to resolve problems at its supply chain end. High quality products may be in demand but Adidas may fail to capture that demand in time due to issues in its supply chain management. Yue Yuen Industrial Holdings Ltd that makes shoes for Adidas AG is amid worker disputes over employee benefits at a factory in Southern China. Industrial activism is on the rise in China because of labor shortage in the country. Yue Yuen is in talks with local government officials and labour union representatives to resolve the issue at a faster pace to avoid any disruption in the production process.

Apart from China, workers at garment factories operating in Cambodia have fallen sick this week due to an unknown reason and were hospitalized. Two of these garment facilities produce sportswear for Adidas and Puma SE Adidas Nitrocharge Shoes. However while the affected staff has been given medical treatment the exact cause behind the illness is still undiscovered. Mass fainting at Cambodia is usually blamed on poor ventilation, strong chemicals, and use of potent glue for footwear. Adidas needs to resolve the matter as soon as possible before the potential reason comes out as a catastrophe and results in production downtime eventually leading to stock out situations.

Bottom LineAdidas has been making moves to maintain its supremacy in the soccer market as well as increasing sales in its company-owned stores. After the company released its earnings forecast that fell short of analysts' expectations there is a positive surprise potential that may lift the stock price. Although these moves are commendable for the time being the company's stock price may be depressed given its exposure to countries with weak currencies, especially Russia. Nevertheless, Adidas has a greater exposure to foreign exchange risk that may outweigh the earning potential. Therefore I will not suggest investing in this stock at this point in time. Investors should look out for the company's upcoming quarter results to assess the direction the company's top and bottom lines is in moving before deciding to invest in the stock.

Source: Adidas: Now Is Not The Right Time

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More.)

Business relationship disclosure: The article has been written by a Gemstone Equity Research research analyst Buy Nike Magista Shoes Online. Gemstone Equity Research is not receiving compensation for it (other than from Seeking Alpha). Gemstone Equity Research has no business relationship with any company whose stock is mentioned in this article.