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New Adidas CEO wants to race ahead in e-tail and boost US sales

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Reuters
Published
today Mar 8, 2017
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The new boss of Adidas hiked sales and profit targets for the German sportwear firm on Wednesday and announced plans to increase ecommerce sales, simplify business processes and keep investing heavily in the key US market.

Kasper Rorsted, the former chief executive of consumer goods firm Henkel who took over in October, said he was adding goals to an existing 2015-2020 strategic plan, putting more focus on company culture, e-commerce and efficiency.


Adidas wants to sell more of its products online and will focus on digital in the months ahead - adidas



Rorsted was appointed to replace long-serving boss Herbert Hainer with a mandate to improve earnings after activist shareholders bought stakes in the firm in 2015 following a series of profit warnings as the German company failed to keep pace with US rival Nike.

Even before Rorsted took over, Adidas had made significant strides, hiking marketing spending and shaking up its US business, helping its shares rise two-thirds in the last 12 months even though its profitability still lags Nike's.

On Wednesday, Rorsted said he would put a new focus on digitisation, increasing e-commerce sales to €4 billion  ($4.23 billion) by 2020, up from a previous target of €2 billion, and expanding the use of technologies such as 3D printing.

He also announced plans to harmonise and simplify business processes, including reducing the number of articles offered and harmonising marketing activities, a similar strategy to that he pursued at Henkel, which helped boost profitability there.

Adidas now expects currency-neutral revenues to rise between 10% and 12% on average between 2015 and 2020, up from a previous target for a "high-single-digit rate", while net income should grow between 20% and 22%, up from 15%.

For 2017, Adidas forecast currency-neutral sales growth of between 11% and 13% and net income to rise between 18% and 20% to a level up to €1.22 billion, ahead of the €1.13 billion expected by analysts.

Adidas also reported a fourth-quarter net loss of €10 million on sales up 12.5% to €4.69 billion , in line with most analyst forecasts after it took a one-off charge to help restructure struggling fitness brand Reebok.

Adidas said it was still trying to sell its golf brands, even though it has missed an initial target to shed them before the end of last year, and said it is also now seeking a buyer for its ice hockey brand, where sales are falling.
 

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