Nike In Trouble? Adidas Is Dominating Casual Athletic Space

It's no secret adidas AG (ADR) ADDYY's stock is on fire this year. The company has steadily risen to become a legitimate threat to Nike Inc NKE over that same period.

With Nike set to release Q1 earnings this week, investors are reasonably concerned with Nike's growth prospects, especially juxtaposed to Nike's status as the worst performing stock in the Dow for 2016.

The athleisure trend has slowed down considerably from a hot 2015, as evidenced by Skechers USA Inc SKX, Under Armour Inc UA and Lululemon Althetica inc. LULU struggles. The outlier in the athletic apparel space is adidas, up a remarkable 85 percent this year.

Related Link: Basketball In Focus: Will Nike's Q1 Figures Be All Net Or Will The Swoosh Throw Up A Brick?

Adidas Kicks Things Up A Gear

Adidas has become a staple in the fashion world, with consumers opting for more casual athletic styles. Simply put, adidas is innovating better than its competitors right now and creating a lot of momentum because of it.

"Our adidas business remains on fire across several platforms led by superstar Stan Smith, NMD, Alphabounce and Ultra Boost," shoe retailer Finish Line Inc FINL said its in second-quarter earnings call last week.

The brand has gone through a literal overhaul in a short period of time, and the excitement around Kanye's partnership with adidas has really created a lot of positive attention elevating the brand's status in fashion. Retail stores are responding and are looking to expand their adidas shelf space.

Adidas has really altered its strategy in the North American market strategy, and it appears to be paying off. When it comes to casual athletic right now, adidas is clearly the favorite.

"And while they remain focused on performance, they've really I think brought the cool factor to their brand. That's driving a lot of interest, a lot of demand," said Finish Line CEO Sam Sato.

Adidas has certainly struggled in the basketball footwear space in the past few years; if the company has make some inroads in clawing back at clear basketball favorite Nike, that could seriously pay some dividends for the world's second largest athletic apparel brand.

Adidas has shifted to individual player endorsements in the NBA and signed many top picks in the recent draft. The company has also announced that it will be making a Kanye West basketball shoe likely for new endorsers, which should create some of the biggest buzz in the NBA in terms of footwear.

Nike's earnings this week will give a lot more insight into just how much its closest competitor is cutting into its sales.

At Time Of Writing ...

• Adidas was down 0.9 percent on the day, trading at $86.31. Year-to-date, the company currently stands up 77.9 percent.
• Finish Line is currently up 0.26 percent at $22.81. Year-to-date, it's sitting up 26 percent.
• Lululemon is down 0.98 percent at $64.55 and up 23 percent for the year-to-date.
• Nike is currently down 1.52 percent on the day, trading at $54.31. Year-to-date, the company is currently down 13.14 percent.
• Skechers is almost flat on the day, seen trading at $22.07. It's off roughly 26 percent for the year-to-date, however.
• Under Armour is down 2.1 percent on the day at $38.62 and down roughly 52 percent year-to-date.

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