Recently there had been increased criticism of the Adidas boss.
(Photo: AP)
Munich After the announcement of the early departure of Adidas boss Kasper Rorsted, investors are calling for a quick succession plan. “Once a decision like this has been made, you have to implement it as quickly as possible,” said Ingo Speich from Deka Investment to the Handelsblatt. Otherwise, the uncertainty in the company will only increase.
Adidas announced on Monday that Rorsted is leaving early in 2023. It is “the right time to initiate a change in the position of CEO to enable the company to restart,” said Thomas Rabe, Chairman of the Supervisory Board. Rorsted’s contract was only extended to 2026 two years ago.
A CEO who everyone knows is leaving in the coming year no longer has the full backing of the owners and therefore no longer has the necessary authority, criticized Speich, who heads corporate governance and sustainability at Deka. “That’s the Lame Duck cliche.”
Daniela Bergdolt, Managing Director of the German Association for the Protection of Securities, said: “A successor solution should be found as quickly as possible.” There could then be a smooth transition with Rorsted, but a name would have to be presented soon. Separation is the right step. “The criticism had become too great. I too have seen deficits.”
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The search for a successor has already begun. According to insiders, the supervisory board is looking around both internally and externally. There was growing alienation.
“The air for Rorsted has been getting thinner lately,” said Speich. Above all, the fact that western competitors such as Nike and Puma had done better in China weakened the position. Nevertheless, the decision came as a surprise at this point in time, as optimism was demonstrated to investors when the quarterly figures were presented at the beginning of August.
>> Read also: Adidas to Rorsted: The successor has to get out of crisis mode
Adidas has an innovation problem, criticized Speich. “The share of new products in sales has gradually fallen in recent years.” Rorsted is a numbers-driven CEO, but not one who gets the employees emotionally involved for the brand. The decisive question is whether the creative minds are still in the group and just need to be encouraged again, or whether too many have left Adidas and now have to be bought again.
Klaus Jost, industry expert and former president of the sports retailer association Intersport International, says: “The internal mood of the Adidas team has recently been very negative and tense.” A successor must now quickly ensure that all managers pull together again and to success could believe. “It’s a liberation for Adidas.”
According to Jost, it was surprising that the supervisory board did not immediately present a successor, but that there was a deadlock. “Something like this can be better prepared.”
Nike and Puma presented themselves better than Adidas
A former Adidas manager says the group is still very masculine and has weaknesses when it comes to female customers. The orientation of the collection at Nike and Puma had been more well thought out in recent years, and this impression was probably also made on the supervisory board.
Rorsted had cashed in the annual forecasts a few weeks ago. He made the new corona lockdowns responsible for this. But in an interview with the Handelsblatt, he also admitted: “Of course we made mistakes in China.” The group did not understand the needs of customers in the country well enough and thus opened up space for local competitors.
Investors had also criticized the weak performance. Since Rorsted took office in 2016, the annual return for investors including dividends has been around five percent, said Thomas Jökel, fund manager at Union Investment. “This number is disappointing.”
At Nike, the performance – price gains plus dividends – is about three times as good on a euro basis. “That’s what you can expect from strong brands in this industry.”
In the Adidas environment and among former employees, Rorsted’s rough management style was repeatedly complained about. Creative minds such as Eric Liedtke, who has been a member of the brand board for many years, have therefore left the group.
In an interview with the Handelsblatt, Rorsted replied that fluctuation at Adidas was no higher than the industry average. In addition, there is a clear division of labor: “My job is to ensure that there is freedom and enough money. I never got involved in the creative process or influenced the development of a shoe.”
In business circles it was pointed out that the past few years in permanent crisis mode had also cost Rorsted personal strength. It is possible that the CEO no longer wanted to do this in view of the growing criticism.
The successor must be a brand specialist who is close to the creative processes, Speich demanded from Deka. “Rorsted was brought in to increase profitability. His core discipline is not maintaining a brand.”
Finding a new CEO will not be easy. But industry expert Jost is convinced that a new, strong top manager will definitely be found. “That’s a dream job.”
More: How analysts rate Adidas stock now.