Adidas Woes

Three Stripes and You're Out

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  • Why it matters

    Why it matters

    If Adidas cannot stem losses, fix mistakes and find new markets, it will lose profit and cede more market share to rival Nike.

  • Facts

    Facts

    • Adidas’ chief executive Herbert Hainer is the longest-serving DAX company CEO.
    • Nike generated $27.8 billion in revenue in its 2014 fiscal year, making it the biggest sportswear maker worldwide
    • In 2015 the global sports apparel industry is expected to be worth more than $126 billion.
  • Audio

    Audio

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It was a night that Herbert Hainer, the chief executive of Adidas, the world’s No. 2 sport shoe maker, will never forget.

Neither will millions of Germans. A summer evening, July 13, 2014.

In a dash toward the goal, Mario Götze, the baby-faced German forward, artfully deflects a long lob from the corner in the 113th minute with his chest, finessing it perfectly to his airborne left foot. Goal.

The balletic score devastates the Argentinians. Germany goes on to win the World Cup 1-0.

The chief executive of Adidas doesn’t absorb the moment like most Germans do, in front of a television screen. He’s in the stadium in Rio de Janeiro.

For Adidas, based in the tiny northern Bavarian town of Herzogenaurach, the German soccer victory is a godsend.

As the country’s national players and their trainer, Joachim Löw, hoist the gold victory cup above their heads to the cheering throngs, the Adidas machine kicks into action.

Out spew German national team jerseys embossed with four golden stars, the mark of the champion.

Mr. Hainer, in the midst of the euphoria, takes selfies in Brazil’s Maracana stadium.

The victory is a personal one for Mr. Hainer, who once scored goals for FC Dingolfing, a semi-pro team in a Munich suburb.

Behind his desk in Herzogenaurach, a photo of the German national team radiates the glory of last year’s cup victory.

Adidas’s partnership with the German Soccer Association, the DFB, turned that triumph into gold.

In just the few months after the World Cup victory, Adidas generated more than €2 billion, or $2.26 billion, from the sale of soccer shoes, jerseys and other fan memorabilia, a record. Through 2014, Adidas sold more than 3 million German national team jerseys bearing Adidas’ famous three-stripe logo. That too was a record, breaking even the sales mark set after the 2006 World Cup, when Germany hosted the event.

But the elation at Adidas faded quickly in the after-glow.

The extra revenue generated by the sales of soccer shirts, shoes and other memorabilia were not enough to offset gaping holes in other parts of Adidas’ business.

Just two weeks after Germany’s World Cup victory last summer, Mr. Hainer had another day he would not soon forget. It was the day he had to revise lower the company’s mid-term and annual sales goals.

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