Adidas's New CEO Promises to Outrun Rivals
March 08 2017 - 2:10PM
Dow Jones News
By Natascha Divac
Adidas AG's new chief executive promised to increase sales and
boost profits faster than his predecessor, saying the German
athletic-gear giant could overcome challenges elsewhere in the
sporting-goods industry.
Kasper Rorsted, who took over in October, said in an interview
Wednesday that the improved profitability would come from selling
more full-priced products and improvements to the supply chain, as
well as foreign-exchange benefits.
Mr. Rorsted said Adidas is working to bring products to market
in-season in order to mitigate inventory losses, and pointed to the
development of new factories at production partner BASF SE, which
makes the Boost material used in some of Adidas' most popular
sneakers.
"Boost is one where we left a lot of money on the table," he
said of recent results, adding that sneakers that contain the
white, spongy-looking material like the NMD, the Ultra Boost, and
others have been consistently sold out because of an inability to
keep up with demand. Adidas has already established a new factory
in Germany and is planning to open another in Atlanta this year to
help speed its own product production.
The company on Wednesday raised its sales forecast to increase
at a currency-neutral rate between 10% and 12% a year on average
through 2020. Previously, it targeted an increase at a
high-single-digit rate. Net income from continuing operations is
projected to rise between 20% and 22% a year on average in the
period, up from a previous forecast of around 15%.
Adidas is in the midst of an overhaul focused on shedding
underperforming operations and beefing up results in the important
U.S. market, where it competes with Nike Inc. and Under Armour Inc.
The American sporting-goods industry has seen a broad contraction
over the last year, with bankruptcies and liquidations at several
retailers as manufacturers have worked to drive more direct
sales.
Dick's Sporting Goods Inc., one of the largest U.S.-based
chains, said Tuesday it would shed a fifth of brands it carries as
it expands distribution of major vendors' products, including those
of Adidas.
The sports apparel and footwear industry has grappled with a
shift in consumer taste away from performance wear toward casual,
fashion-forward looks. Such changes are evident at Adidas, where
sales of lifestyle-oriented products rose 45% for the year, while
performance products rose 13%.
Mr. Rorsted cautioned that the performance business accounts for
about 70% of Adidas brand sales, and that the division between
performance and fashion products is blurring.
Adidas's net loss in the three months ended December narrowed to
EUR10 million (about $10.5 million) from a EUR44 million loss a
year earlier. Sales increased to EUR4.69 billion from EUR4.17
billion, boosted by growth in its running category.
Adidas said it would continue to sharpen its focus on the Adidas
and Reebok brands and whittle away at noncore operations. The
company is now seeking a buyer for its ice-hockey brand CCM Hockey,
and said the sales process for the golf brands TaylorMade, Adams
Golf and Ashworth, is on track.
Write to Natascha Divac at natascha.divac@wsj.com
(END) Dow Jones Newswires
March 08, 2017 13:55 ET (18:55 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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