Adidas: Key takeaways from Innovation Day

Adidas hosted an Innovation Day at company HQ last week. In this short note, we highlight our three key takeaways from the event. We like the company fundamentals and believe the stock is severely undervalued, but don't see a ST catalyst for re-rating as tough sector dynamics and promotional environment will remain an overhang on sentiment and the multiple for now. Three main takeaways: (1) The decentralized operating model is working — decentralizing decision-making around design, supply and replenishment helps Adidas move faster to respond to demand trends and lean into pockets of growth, allowing them to gain share in every geography (as they have done for the last two years); (2) Product pipeline is balanced across Performance and Lifestyle, including a compelling pipeline across categories, use cases, price points and styles;