By Ellen Emmerentze Jervell
HERZOGENAURACH, Germany-- Adidas AG said Thursday that it aims
to lift profit by 15% through 2020 as it battles to assuage
investors' concerns after abandoning earlier financial targets.
The world's No. 2 sporting goods company behind Nike Inc. said
it would speed production while increasing its presence in major
cities and investing in its core brands
It expects to outperform the sporting goods industry with group
sales growing at a "high-single-digit rate" for each of the next
five years, it said.
"We will accelerate our growth story and deliver superior
returns to our shareholders," Chief Executive Herbert Hainer
said.
Adidas has suffered a number of setbacks lately, surprising
investors with two major profit warnings in the course of a
year.
The political turmoil in Russia--where Adidas has a strong
presence--and the resulting impact on the Russian ruble knocked the
shine of the company's earnings. Sales at its once-booming
TaylorMade-Adidas Golf division plummeted.
At the same time, Mr. Hainer failed to achieve his aim to
rebuild the company's position in North America. According to
Sterne Agee and SportScanInfo, its U.S. retail market share fell to
7% in 2014 from roughly 18% in 2006.
The company's previous five-year strategic plan announced in
2010 anticipated sales growth of more than 45% to EUR17 billion
($18.65 billion), but Adidas said last year that it was unable to
meet those targets.
For more than a decade, the company looked invincible. Mr.
Hainer became known as a strategic and business-minded leader,
reporting year-on-year sales growth of up to 20%. The company's
share price more than quadrupled between 2002 and 2014. In March
last year, Mr. Hainer's contract was extended until 2017.
Then his winning streak ended abruptly.
He issued two major profit warnings and slashed the company's
financial goals for 2014 and 2015. The Adidas stock price tumbled
40% last year.
As a result, some Adidas investors have questioned Mr. Hainer's
leadership and recently pushed for his departure. Adidas said last
month that it had started looking for his successor.
"I know that we disappointed," Mr. Hainer said Thursday, adding
that the company aims to "come back even stronger than before."
In the new five-year strategic business plan, named "Creating
the New," Adidas said it would reduce its production lead times. It
also plans to expand its e-commerce business to above EUR2 billion
by 2020.
It plans to "over-proportionally" invest in talent and marketing
in metropolitan areas around the world. Its key focus will be on
six cities: Los Angeles, New York, London, Paris, Shanghai and
Tokyo.
"If we win running in New York and Los Angeles, we will win
running in the U.S.," Roland Auschel, Head of Adidas's global sales
said.
Earlier this month, the company reported 2014 net profit of
EUR490 million, down from EUR787 million the year before on sales
worth EUR14.5 billion.
Write to Ellen Emmerentze Jervell at ellen.jervell@wsj.com
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