Munich, Herzogenaurach The appointment in Herzogenaurach should ensure a new beginning. Adidas boss Björn Gulden recently invited the most important specialist dealers to the company’s Franconian campus. At dinner, ski legend Mikaela Shiffrin provided glamor and Gulden a good atmosphere. He sat down at each table and patiently listened to what the Adidas partners had to say.
Gulden heard some anger from his predecessor Kasper Rorsted. He was less interested in the specialist dealers than in the online business. “We made you big, and now you’re excluding us,” was the feeling of many, says an Adidas partner. A veritable anger had accumulated among the specialist dealers.
Rorsted’s online-first strategy failed. The Dane had to vacate his chair at the end of 2022, which took over guilders hijacked by his last successful competitor Puma.
He is now ensnaring the recently sniffed specialist dealers with a major strategic move. In the “Future Lab” Gulden gave his visitors an unusually early and deep insight into the autumn and winter collection. “It was a 180 degree turn compared to a meeting a year ago,” one participant told Handelsblatt.
The charm offensive in Herzogenaurach is well calculated. The new CEO has to get the sluggish business going again. The company announced on Friday evening that it would sell some of the remaining “Yeezy” products from its collaboration with controversial rapper Kanye West in May. A good portion of the proceeds will be donated to organizations that fight racism and anti-Semitism However, the group has to find a replacement for the billions in sales that it previously made with West.
In order to lead Adidas back to its old strength, Gulden has not made any major structural changes in its first four months – the big hit is yet to come. A new strategy as a follow-up to Rorsted’s failed medium-term plan “Own the Game” will probably not be available until the beginning of next year.
The end of the cooperation with the controversial rapper Kanye West continues to burden the group.
(Photo: AP)
But a deeper look into the company shows how much Gulden is already working behind the scenes and how far-reaching his change of course is. It remains to be seen whether it will be enough to get the ailing global brand back on course.
1. Retailers are now Adidas’ number one priority
Rorsted was fully committed to “D2C” (direct to customer). So the priority for him was the expansion of his own online shops. “Own the Game” envisaged a doubling of e-commerce sales by 2025 to eight to nine billion euros. Particularly hot products were first sold exclusively online – retailers had to queue at the back, especially during times of shortages during the pandemic.
In the first quarter, the D2C share of its own online shop and stores was a good third. “It will stay that way for the time being,” says an insider. Because Gulden emphasizes at every opportunity: “We really, really, really have to take retail seriously again.” Young people who play soccer wanted to compare models from different manufacturers in a shop.
The manager had fully focused on expanding his own online shops.
(Photo: dpa)
As a result, retailers now get early insights and are the first to see the latest products. Some of the people I spoke to in the Adidas sales department seemed unleashed, says a retailer. “Some of them weren’t happy with the situation themselves.”
Gulden is explicitly willing to forego the very high margins so that the dealers as well as the suppliers and producers get their fair share. Double-digit returns should be possible for Adidas again, he said at the general meeting. “But let’s be satisfied with ten percent instead of doing 17.” The retailers, says an Adidas manager, also bear part of the risk. Goods that have already been sold are stored with them instead of burdening the Adidas warehouse itself.
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The big dealers are happy about the new course. “The focus is completely different,” says Sport2000 Managing Director Dominik Solleder. Gulden quickly showed that he was serious about relying more on specialist retailers as partners again. “The appreciation is high again.”
2. Björn Gulden’s team is standing – for now
In terms of personnel, too, Gulden has so far only selectively but consistently set accents. In his career, the Norwegian has almost never brought in confidants from his old company to create a powerhouse, says a confidante. “It was never his style. He is working with the existing staff first.”
But Gulden rebuilt the team in a short time. His most important mission is to bring the brand back to its old strength. When he presented the new brand board (Global Brands) at his first big appearance, he chuckled and threw a photo of himself on the wall. “Brand management belongs in the hands of the CEO.”
Predecessor Brian Grevy was seen internally by some as overwhelmed – and as a Rorsted man. The Dane only brought his compatriot back to Adidas in 2020. The long-standing sales director Roland Auschel also resigned after 33 years at Adidas. The manager was said goodbye with praise and took the change in a sporty way: at the running event a few weeks ago, he cheered on his ex-colleagues on the campus in Herzogenaurach.
Arthur Hoeld, whom the new CEO knows from his first position at Adidas, is to complete Gulden’s turn towards retailers. Martin Shankland stayed. Like Rorsted, the Australian had gained a reputation for leading somewhat rough and was considered a shaky candidate. So far, according to company circles, he has been able to convince Gulden professionally. Maybe, says an insider, he’ll take a look at Gulden’s collegial management style.
CFO Harm Ohlmeyer is still in place anyway and enjoys Gulden’s full trust. Personnel manager Amanda Rajkumar is also part of the team for the time being. One has to wait and see whether the chemistry between her and Gulden is right, says an insider. The Brit joined from BNP Paribas two years ago. The mission is delicate. There were heated internal Black Live Matters debates at Adidas, as a result of which Rajkumar’s predecessor Karen Parkin left after 23 years at Adidas.
At the general meeting, Ines Straubinger from the German Protection Association for Securities Ownership also wanted to know whether Rajkumar was responsible for looking after Kanye West, from whom Adidas had separated after anti-Semitic statements, and what she had done and when. At the general meeting, the head of the supervisory board, Thomas Rabe, reported that allegations that Adidas managers knew about West’s activities at an early stage but had done nothing had “not been substantiated”. But the scandal is not over yet.
3. Brand and products in focus instead of pure shareholder value
The very quick operational turnaround is not possible for Adidas even under new management. Collections that were developed under Rorsted are currently being sold. However, Gulden made it clear that the product and brand have top priority for him – at Rorsted it was above all shareholder value. Gulden is said to have said internally that it was not in his interest if strategy departments had 200 employees, but at the same time there was a lack of staff in development, marketing and sales or that they were being cut.
“Björn has an incredible knowledge of the products and is credible as the first brand ambassador,” says an Adidas manager. As a former soccer player, he knows professional sport from the inside, at Deichmann he was an important customer, at Puma he observed the group from the perspective of the competition. “You believe him when he says he loves the company and the sport.”
According to company circles, one of Gulden’s goals is to bring new products to market more quickly. To do this, he traveled to suppliers in Asia. These would have to become more flexible in order to be able to react more quickly to trends in the future.
On the product side, according to company circles, Gulden will in future rely heavily on vintage and original models from Adidas’ history, such as the newly launched “Samba” and “Gazelle” shoes. Sporting goods manufacturers such as Nike and Puma have long relied on such retro trends, and this also applied to Rorsted.
But Gulden wants to react more quickly to the market. “He is now ramping up production more quickly,” says someone from the area. “Rorsted would first have asked his smart-ass consultants, who would have checked 5,000 key figures.” Gulden also wants to sell more fringe sports and products specially developed and adapted for regional markets. At the annual general meeting, HR director Rajkumar was already walking around in a bright green tracksuit with Chinese characters.
4. Better mood should now ensure more creativity
That goes down well with the employees. Gulden is very present on campus. He also cycles across the site with a Chinese manufacturer. At the “Road to Records” running event, after a cross-country skiing accident a few days earlier, he ran the five-kilometer route with his colleagues with a bruised face and injured shoulder. Two weeks later, the shoulder had to be operated on – and Gulden posted a photo from the hospital.
“Our industry is 50 percent rational, 50 percent emotional,” he told Handelsblatt. And so, in this difficult year, Adidas is benefiting from the fact that retailers, employees and investors are giving the new CEO a great leap of faith.
Despite injuries, the new CEO took part in an internal running event.
(Photo: Adidas)
In this way, Gulden could turn the tide even without the drastic changes. He has set the expectations for the current year very low – a drop in sales in the high single digits, a possible operating loss of up to 700 million euros. The chances are now high that they will be surpassed in the course of the year. “Gulden has always forecast very conservatively,” says one who worked with him.
From next year things could pick up again. “The brand’s positive appeal has recently suffered from specialist retailers,” says Sport2000 Managing Director Solleder. But the industry is also quick to forgive. “If the embers are still warm, you can easily rekindle the fire. And that is very much the case with Adidas.”
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