By Natalia Drozdiak
FRANKFURT-- Adidas AG said Thursday it had begun a search to
replace longtime chief executive Herbert Hainer, who has led the
company through years of success, but recently struggled to meet
profit targets, sparking investor pressure for change at the
top.
Mr. Hainer has presided over the world's No. 2 sportswear maker,
behind Nike Inc., since 2001. His contract was extended last year
until March 2017, and the company at the time said the move was to
allow time to find a successor.
But Thursday's announcement about the CEO search, contained in a
letter to employees, was the first time the company had provided
detail about the search.
In late morning trading, Adidas shares were up 6.2%.
"Given the current share price weakness, this rather indicates
that the Adidas brand is currently undervalued, and (today's) jump
reflects the hope that things will improve," said Christian
Schwenkenbecher, analyst at Hauck and Aufhaeuser.
In the letter to employees, Mr. Hainer said Adidas will present
a five-year strategic plan in March. The presentation, which will
be shown to staff first and then to investors, has been scheduled
since last year.
Analysts also partially attributed the share price rise to a
report by the German monthly Manager Magazin. The report, which
cites company sources, said Adidas' new strategy for 2020 targets
EUR20 billion ($22.8 billion) in sales, up from the current EUR14.8
billion, as well as an earnings before interest and taxes margin of
at least 10%.
"The sales target would suggest growth in line with, or slightly
above, the market and therefore would be achievable," said
Mainfirst bank analyst John Guy. "But the margin target is more
complex, given lack of visibility around future currency volatility
and Adidas' retail positioning in Russia."
Over the past year, Adidas has been hit by headwinds, including
disappointing sales at its golf unit, and in its two biggest
markets: the U.S. and Russia. Shares fell roughly 40% last year
after three profit warnings in 10 months. Though shares have
recovered somewhat this year, big shareholders have been pressuring
Adidas for management changes.
"Given the poor previous guidance experience, the management
team ought to be more cautious around future targets," Mr. Guy
said. "But neither the current CEO or CFO are likely to influence
operations from 2018 onward."
The Adidas chief executive said he has three clear priorities
for his remaining time in office. "To ensure that the company stays
on its growth track for 2015 and beyond, to get the new strategic
business plan off to a great start, (and) to continue to pursue the
already initiated generation change within our group's senior
management team," he said.
Mr. Hainer also said the company was looking at internal and
external candidates to replace him.
Mr. Guy said Mr. Hainer's successor would likely be chosen from
within the company. He said executive board members Eric Liedtke,
head of global brands, and Roland Auschel, head of global sales,
would both be likely candidates.
Mr. Hainer said in the letter the company has had a successful
start to the year after efforts in recent weeks and months to
strengthen the brand and realign the company.
Adidas in January sold its Rockport unit for $280 million to a
new entity formed by Berkshire Partners and New Balance, in a
planned move that allows Adidas to focus more on sporting goods.
The company also said it met a reduced profit target for last year
of roughly $650 million.
Adidas has also shuffled managers and announced a new push in
the U.S. over recent months.
"I am very conscious that all these changes weren't always easy
and weren't always fun to implement, also because a lot of external
criticism was brought on the company," Mr. Hainer said.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
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