Adidas Online

Playing by Its Own Rules

  • Why it matters

    Why it matters

    Without a boost in profit margins and earnings, Adidas may not be able to keep up with its U.S. arch-rival Nike and smaller peer Under Armour, posing a risk to the company’s stock price and CEO’s position in the long term.

  • Facts

    Facts

    • For years, Adidas has lagged behind its main rival Nike in terms of profitability; it made an operating profit margin of 7.7 percent in 2016, compared with Nike’s 13.9 percent.
    • In October, Kasper Rorsted was brought in from German detergent and glue maker Henkel to increase Adidas’s profitability and earnings and make its Reebok brand successful.
    • In addition to Nike, Adidas competes with Under Armour, German brand Puma, and smaller brands such as Asics and Salomon and white label sport goods makers.
  • Audio

    Audio

  • Pdf
Adidas – Jahreszahlen 2016
Adidas chief executive Kasper Rorsted has seduced investors but alienated retailers. Source: DPA

Since taking over as Adidas chief executive last October, Kasper Rorsted has quickly won investors’ approval. Especially early last month, when the 55-year old Dane raised the company’s medium-term goals, the markets responded enthusiastically. The share price leaped 10 percent within minutes of the announcement. The centerpiece of Mr. Rorsted’s plans was a massive increase in online revenue, raising Adidas’s 2020 target from €2 billion to €4 billion, around $4.27 billion.

But many sports retailers see Mr. Rorsted’s investor-friendly plans as a declaration of war. “It’s a slap in the face for people who, over decades, have made Adidas what it is today,” said one leading manager of an international sports retail chain, who preferred to remain anonymous. Others are speaking out openly. “This means more competition for us,” Markus Rech, head of the Munich-based sports retailer Sport Scheck, said bluntly.

In private, many German retailers are already bitter toward what is by far their most important supplier. They are particularly angry about the steep discounts Adidas offers in its online stores, and complain about delays in delivery that leave yawning gaps on their shelves while the same items can be purchased easily on Adidas’s own websites.

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