The new CEO has already declared 2023 to be a year of transition for Adidas.
(Photo: Reuters)
Herzogenaurach Almost two weeks before the annual general meeting, the new Adidas boss Björn Gulden called for patience in the restructuring of the ailing sporting goods group. “We have to take one step at a time,” the Norwegian told Handelsblatt. The group has everything you need. “We just have to put it together correctly.”
Gulden, who switched from smaller competitor Puma to Adidas on January 1, has already turned the mood. This was also evident on Saturday at the “Road to Records” running event in Herzogenaurach, in which top athletes from all over the world, but also many employees of the Group, took part.
Gulden himself ran the five-kilometre distance in 23:46 minutes – although he had only recently fallen at a ski marathon in Norway. The injuries on his face and a damaged shoulder still bear witness to this.
The currently good mood should also help with the economic recovery of the group, which fell far short of the sales and profit targets last year. Because, according to Gulden: “Our industry is 50 percent rational, 50 percent emotional.”
It is clear to everyone that a quick turnaround is not possible, according to supervisory board circles. However, Gulden has already taken some correct steps, for example to improve the ailing relationship with the dealers. “We are confident that Björn Gulden can turn things around,” agrees Thomas Jökel, portfolio manager at Union Investment. “But we still have to give him time for that.”
“Adidas can no longer afford negative headlines”
According to Jökel, Gulden’s main task is to make the Adidas brand attractive again and to regain the trust of retailers. In any case, the following applies: “The company can no longer afford negative headlines.”
Last year, Adidas sales were weaker than promised by just one percent to 22.5 billion euros. Business slumps in China and the separation from US scandal rapper Kanye West, with whose “Yeezy” collection Adidas had achieved sales of well over a billion euros in good years, were particularly responsible for this. CEO Kasper Rorsted had to resign prematurely in view of the numerous problems .
“There was also a lot of bad luck,” says a former top manager at Adidas, referring, among other things, to the consequences of the corona pandemic. In the meantime, the course has been set, for example through the development of more products that are specially adapted to the currently difficult Chinese market. However, Adidas has not yet presented a solution for the “Yeezy” products that have already been produced and are currently unsaleable in the warehouses.
Gulden has at least tackled many other issues. In the past few weeks he was in Asia at a supplier summit and on a roadshow in the USA, where he also got an idea of the US market, which is currently difficult for all suppliers. Competitor Puma just had to report a 19 percent drop in sales in North America in the first quarter.
In its first few months, Gulden tried in particular to regain the trust of sporting goods retailers. Predecessor Rorsted had relied heavily on the expansion of online trading, which promises higher margins through direct sales. The decision to expand the channel was fundamentally correct, says an Adidas manager. But Rorsted overdid it, the balance was no longer right.
The new CEO wants to win back the trust of retailers
Gulden, on the other hand, had already declared at Puma that he believed in the future of specialist retail. Athletes wanted multiple brands to choose from. He was also willing to forgo the last point, Marge.
Gulden’s credibility as an ex-professional footballer is helping to revitalize the brand with the three stripes. The Norwegian shows on his social media channel that he enjoys negotiating and maintaining contact with the athletes. In the past few days alone, he has presented photos of himself with ski star Mikaela Shiffrin, soccer world champion Zinedine Zidane, Olympic marathon champion Peres Jepchirchir and Wimbledon winner Garbiñe Muguruza.
At some point, however, the charm offensive must also be reflected in numbers. Gulden has already declared 2023 to be a year of transition – hence the call for patience. Sales could also fall in the high single-digit percentage range due to high inventories, and a loss of up to 700 million euros is possible in the operating result.
More: Even after a change of boss, Puma is growing in double-digit percentage terms.