By Ellen Emmerentze Jervell
Herbert Hainer has spent his 15 years as chief executive of
Adidas AG trying to best larger rival Nike Inc. and regain the cool
vibe of Adidas's 1970s heyday. It has been a bumpy ride.
The wiry 62-year-old retires this fall after leading the iconic
German brand from a market capitalization of EUR3 billion ($3.4
billion) to roughly EUR30 billion. Adidas has lifted its earnings
guidance for this year four times since April and now forecasts net
profit to rise almost 40% over last year. Sales are growing in all
key regions and the share price has more than doubled since last
summer.
For Mr. Hainer, who once dreamed of a professional soccer
career, it is a come-from-behind scenario. Two years ago Adidas
issued a string of profit warnings and slashed its five-year
targets. Investors knocked almost 40% from its share price and some
called for Mr. Hainer to quit.
Blaming poor golf sales and Russia's economic crisis, he
promised a turnaround and hung on. Foremost in his plan was
reversing a sales slide in the U.S., the world's biggest and most
influential sporting-goods market. Most recently, he extended
Adidas's partnership with Kanye West, betting the musician and
designer will not only give the brand more traction, but also boost
American sportswear sales.
As he prepares to hand his office to CEO Kasper Rorsted in
October, hired from Henkel AG, Mr. Hainer talked with The Wall
Street Journal about longevity in the corner office and the
emotions sparked when the company he calls "my baby" spiraled
downward. Edited excerpts:
WSJ: How do you last 15 years as CEO?
Mr. Hainer: The key task is to find the right people. I don't
design or develop products anymore -- I wouldn't be a good designer
anyhow. But I have to find the best people for the individual jobs.
It's like a soccer team, you can't have strikers only. You would
shoot 10 goals, but you would also get 11 in the back. You need
certain skill sets and then bring the individuals together as a
team. When you look at the people who have key roles at the
company, you see that we have worked together for a very long
time.
WSJ : Right after you sponsored the 2014 World Cup, Adidas
issued a big profit warning that shocked investors. When did you
first understand that you would miss your targets?
Mr. Hainer : It all began with the Russian economy worsening,
and then the war in east Ukraine happened. Russia was our
third-biggest market behind the U.S. and China, and one of our most
profitable. The overall golf business did not perform as well as
thought either, and this was another factor. But Russia we could
not foresee.
WSJ: Why didn't you alert investors earlier?
Mr. Hainer: I had to understand the full impact first, and I was
trying to take all the measures to compensate for it. Then, when I
saw that these measures were not good enough, of course I had to go
out and tell the public.
WSJ: What did you tell top managers?
Mr. Hainer: What happened didn't come out of the blue for the
management team. Of course they had been involved early on. I told
my team that yes, this is a tough time, but it's not the first
time. In 2009, when the world economic crisis hit, the situation
was similar. And I was absolutely convinced that we would get
back.
WSJ: How did it make you feel when investors said they wanted
you to leave?
Mr. Hainer: I was surprised and I was angry. I thought it was
unfair.
WSJ: Did you ever think you should have left earlier?
Mr. Hainer: Not really. There was a day when I thought, 'I still
have two more years -- why is Ukraine and Russia happening now?'
But that was just a blip. And then I came back and said, 'OK, good,
it is what it is. Now we have to show the world that we can do
better.'
WSJ: What did you change?
Mr. Hainer: We gave much more power and responsibility to our
brand managers. We made them responsible, from design and
development to end products. And we made them responsible for the
whole supply chain. In the past, we used to be a little more, say,
feudalistic, in our organization.
WSJ: How did you rekindle the U.S. business?
Mr. Hainer: After a time, I think we figured out what we had to
do in America. Over the past 18 months, we've changed the complete
management. We work a lot closer with the key retailers now. When
you go to Dick's [Sporting Goods], to Foot Locker, you now see our
displays, not only individual products on the wall. I shouldn't
forget Kanye West either.
WSJ: How important has Kanye West been to Adidas?
Mr. Hainer: Kanye has definitely helped us, no doubt. But he is
not only a celebrity who is wearing our products. He was here day
and night and worked with the design team. Sometimes he drove the
designers crazy, but this also gave our people inspiration. You
know how he is.
WSJ: How does the future look?
Mr. Hainer: I can definitely promise you, even if I'm not here
then...the double-digit growth rates we have right now in the U.S.
will continue.
Write to Ellen Emmerentze Jervell at ellen.jervell@wsj.com
(END) Dow Jones Newswires
August 30, 2016 10:47 ET (14:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.