But as you rightly say, it’s a small part of the segment. And of course, our challenge then is to take that, what should I say, credibility, having the right athlete, the right technology and the right product and then cascade it down to more commercial product. And of course, the speed of that, I can’t promise you, but it’s better to do it that way than the other way around. You know that there are other brands currently that has played the Comfort game. I mean both HOKA and OMs had success with their story, and you should not be surprised to see also in our line, you will have more running shoe that is built on the Comfort story. I can’t promise you any numbers. The only thing I can promise you that the visibility in running will be increased.
So you will see us at more events, you will see us with more athletes and you will see a bit more, what should I say, products out there, and then we will be patient. On running specialty, it’s also fair to say that adidas is less running specialty in many markets, so we didn’t have a sales force anymore. The idea was that the runner will buy it in our D2C, and that doesn’t work. So we are again building our sales force and I would say, technical experts to support running specialty to also build a real relationship to running community, which you have to do physical and not digital. So there is quite some investment going on there. And of course, the payback of that will take some time, but it’s the only right thing to do for a brand like adi.
So you also have to be a little bit patient, but the product is there.
Operator: The next question comes from the line of Erwan Rambourg with HSBC.
Erwan Rambourg : I had one for Bjorn and one for Harm. So Bjorn, one on China. I just came back from China about 3 weeks ago. And there’s a lot of talks of Western brands taking back share from local Chinese brands after pretty much 2.5 years of misery. I’m wondering if you could comment on that. How easy is it now to operate in terms of brand ambassadors in terms of events? Is there a role post the neo-restructuring? Can you comment on inventory levels, specifically in China? And last year, you were down 50% in Q4. So what can we expect both short term and long term for that market? So that’s for you, Bjorn. For Harm, I was just wondering on the gross margin levers, you talked about freight input costs, promotional activity, FX.
I’m just wondering if you can comment on timing of when some of those start to turn. The FX pressure, how long will that last for? The promotional activity, it seems that leaving aside the U.S. that’s going to temper somewhat, but can you help us understand the building blocks to think about gross margin in, again, the short and the longer term from here?
Bjorn Gulden : I’ll start. On the China situation, I think we need to divide the lifestyle business and the performance business. When it gets to the performance business, it’s obvious that the local brands has built a price point for running shoes, basketball shoes and all the performance shoes that is below what, for example, we are offering. That means we have been competing in running, I would say, also in basketball in a smaller part of the market because our price points has been high. And if you want to have real volume, I think you need to go down and also do re-performance shoes at sub-$100 price points. That’s what we are going to do to compete for a bigger part of the consumer. The rest, I mean, the higher end is starting to grow again, but that market is smaller than you might expect.
On the lifestyle area, we’ve been lagging the, what should I say, the opportunity to actually work with celebrities coming out of music or out of art or out or whatever. And that has changed in the sense that we now are starting to activate again, actresses, actors, musicians, I would say, street culture relevant people, for example, in breakdance. So far, all these activations has been working without any shitstorm for any what should I say, communities. How long that will last? And is it forever, we don’t know, but the team is very energized by actually starting to compete again on a fair level compared to local brands. You saw that our underlying business was up 10% for the quarter. And again, our own concept stores, where we actually have the best of the best is actually much higher than that.
So there is clearly, what should I say, a consumer that goes back again to Adi on a higher level than it was a year ago. I think when you look at Q4 in China, you have to be very careful because there’s many movements in the wholesale business there with takebacks of inventory and how do you actually push in products for Q1 and not so I’m not going to give a number, but the Chinese number will at least be up double digit, regardless how high it’s going to be. And it’s the same thing there. We will see how 11/11 goes, which you know we are in the preselling right now. And then we will adjust all our wholesale business according to what we see. We will not push anything into the market in Q4. I can promise you that. And then, of course, we will hope that the market will continue to develop the way it should.
We will overinvest in marketing and then continue to see a growth in the Chinese market, but not to try to get it very, very quickly up to the previous levels because the risk then again is, of course, that it crushes. We have moved 75% of our volumes to local sourcing, and we are doing 30% of our product at what we call quick response replenishment. So the preorders that we’re taking with all our partners is going down substantially because we don’t want to push it in and take back. We want to deliver in and then replenish both with new products and with all products. So the business model is changing. And I think if you ask our local team, they’re very, very happy with the way we’re developing when it gets to the business model. And with that, I hand over to Harm.
Harm Ohlmeyer : Yes, Erwan, on the gross margin, very good question. And of course, I’m not going to give you any guidance for next year, but you can assume that FX is probably the only drag going into next year. And that FX is probably more negative in the first half and then it’s during neutral and maybe even positive in the second half. That’s where we are from an FX point of view. When it comes to all the other elements, freight will be positive for the full year, probably more positive in the first half, as it then more neutral in the second half as well. And then, of course, as Bjorn alluded to, we have more trajectory with our Terrance products and lifestyle overall, lifestyle presents ourselves an attractive margin. So the overall business mix will turn positive as well.
