Hainer's Rebound

A Solid Farewell at Adidas

CEO of Adidas-Group Herbert Hainer speaks during a press conference about the sponsors agreement between DFB and adidas in Paris, France, 20 June 2016. The UEFA EURO 2016 takes place from 10 June to 10 July 2016 in France. Photo: Christian Charisius/dpa +++(c) dpa - Bildfunk+++
A happy goodbye for Herbert Hainer.
  • Why it matters

    Why it matters

    Herbert Hainer leaves Adidas in a solid position to make further inroads against the global sportswear leader Nike.

  • Facts

    Facts

    • Adidas’ reported net income doubled in the second quarter to €291 million, while sales jumped 13 percent.
    • The company boosted its full-year profit forecast for the second time this year and now predicts an increase of 35-39 percent.
    • Herbert Hainer will step down as CEO in October after 15 years on the job, giving way to Kasper Rorsted.
  • Audio

    Audio

  • Pdf

Herbert Hainer has a lot to smile about. The man at the helm of Adidas for the last 15 years may be quitting Europe’s largest sportswear company in two months, but he can leave with his head held high.

The chief executive on Thursday surprised investors with a solid increase in second-quarter profits. More than that: He raised Adidas’ full-year profit forecast for the second time this year.

Revenue jumped 13 percent in the second quarter to €4.4 billion. Net income from continuing operations doubled to €291 million, aided by the timely cancellation of a sponsoring contract with Chelsea Football Club in Britain, which increased profits by a high double-digit million figure, the company said.

The rosy profits prompted Mr. Hainer to forecast a net-income surge of between 35 percent and 39 percent for the whole of 2016. That’s up from a 25-percent increase previously. Sales are now seen rising up to 19 percent instead of the 15-percent figure predicted until now, and the operating profit margin is seen at 7.5 percent instead of 7 percent.

The message from Mr. Hainer: He’s leaving a house in solid shape: “We are extremely pleased with how well our brands are connecting with the consumer and how fast our new strategy has started to gain traction,” he said Thursday morning.

Mr. Hainer only plans to release the full quarterly results next week, but his preliminary statement shows just how far the company based in the tiny Bavarian town of Herzogenaurach has come over the past year.

Investors were pleased: Shares in Adidas surged on the news, up more than 4 percent to €146.25 by 1:30 pm local time, making them the highest gainer on the blue-chip DAX index. A once-beleaguered firm can’t seem to put a foot wrong this year: Shares have jumped more than 50 percent over the past six months.

“We are extremely pleased with how well our brands are connecting with the consumer and how fast our new strategy has started to gain traction.”

Herbert Hainer, Adidas CEO

Above all in sports lifestyle wear, Adidas seems to have made gains by tapping into current trends. The European soccer championships in France this June, which Adidas sponsored, have also likely provided another boost.

Perhaps most importantly, the numbers set Adidas apart from its rivals, both in Germany and in the United States, where global leader Nike has had a slower start to the year.

After long struggling in its shadow, Adidas is growing faster this year than Nike, which posted revenue gains of just 6 percent in the fourth fiscal quarter at the end of May.

But there’s still a long way to go. With revenues of €7.4 billion, the U.S. West Coast firm remains a much larger player, and more profitable. Adidas is now aiming for full-year net income of €1 billion; Nike posted €760 billion in profits in a single quarter.

While Nike might still reign supreme, Adidas at the very least has set itself apart from its struggling cross-town German rival Puma, whose revenues increased by just 7 percent in the second quarter and are about a fifth of that of Adidas. Puma has also failed to make any money, earning just €1.6 million on the quarter.

Making further inroads into Nike’s dominance will not be the job of Mr. Hainer. Starting in October, he will be replaced by Kasper Rorsted.

The Danish executive and long-time CEO of consumer goods firm Henkel will already become an executive board member on Monday, and then will have two months to work his way into the company.

Mr. Hainer’s positive report card Thursday should allow him to hit the ground running.

 

Joachim Hofer covers retail and sportswear for Handelsblatt. Christopher Cermak of Handelsblatt Global Edition contributed to this report. To contact the author: hofer@handelsblatt.com 

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