German apparel and footwear leader Adidas AG (ADDYY) continues to gain ground on the world’s largest sportswear company, Beaverton, Ore.-based Nike Inc. (NKE). The European company posted first-quarter earnings that beat estimates, after raising its outlook four times in 2016. Adidas and German industry peer Puma SE (PMMAF) have shown the benefits of a renewed fashion focus, in which a lack thereof has attributed to declines for U.S. rivals such as Under Armour Inc. (UAA).
Adidas reported net income of 455 million euros ($494 million) in Q1, reflecting a 30% jump year over year (YOY) and surpassing estimates for 421 million euros ($460 million). Revenues for the first three months of 2017 came in at 5.67 billion euros ($6.12 billion), with online sales up 52%. Analysts had forecast sales of 5.4 billion euros ($5.91 billion).
Adidas’ sales gained 31% in North America, the German company’s strongest-performing region, while China sales grew 30%. Adidas’ trending lines such as Reebok, up 13% last quarter, successfully capitalized on Millennials’ preference for retro and athleisure offerings over traditional athletic apparel.
Building ‘Sustainable Brand Loyalty’ in U.S.
“We need to be humble about where we are in the U.S.,” said Chief Executive Officer Kasper Rorsted on a call with reporters. “Our target is to build sustainable brand loyalty. We are coming from a very different basis than our larger competitor.”
Moving forward, the company plans on doubling down on North America and speed up its supply chain in order to sell more goods at full price. The German sportswear giant says it is on track to quadruple online sales to 4 billion euros ($4.4 billion) in three years.
Shares of Adidas are trading up about 2% on Thursday, as the stock hovers around all-time highs. (See also: Can Adidas Beat Nike as America’s Favorite Shoe?)