Adidas CEO

Playing Catch-Up

Hainer-Getty Images
Thinking hard about the next move. Source. Getty Images
  • Why it matters

    Why it matters

    The traditional German sporting gear company needs the U.S. market to grow, and is stepping up efforts to tackle American giant Nike and upstart Under Armour.

  • Facts

    Facts

    • Adidas ranks third in the U.S. sports goods market, behind Nike and Under Armour.
    • Mark King became new chief of the North America business in June 2014.
    • The German company makes almost a quarter of its revenue in the U.S.
  • Audio

    Audio

  • Pdf

Herbert Hainer, 60, has been at the helm of Adidas since March 2001. The sales specialist left consumer goods company Procter&Gamble in 1987 to join the sportswear company . He was appointed to Adidas management board in 1997.

Handelsblatt: In 2014, the Adidas share was the worst performer in German blue chip stock market index DAX. Is that the end of Adidas’ golden age?

Indeed, we faced several problems in 2014 in the golf business and in the United States, and the currency turmoil hit us, too. But many things have turned out positive nevertheless.

It looks like investors haven’t noticed that.

We’re a high-growth company. In 2014, the Adidas brand grew by 11 percent, Reebok by 5 percent. Both brands together account for 90 percent of our business. Of course, the world soccer championship was a big boost.

If business wasn’t so bad, then why the share price plunge?

For 12 years, we were the industry’s and media’s darling. Then we adjusted the profit forecast twice. That, of course, was a disappointment – for us as well. We have to admit some things we didn’t do well enough.

Was it a mistake to invest so heavily in Russia?

If someone had told me five years ago that such a dramatic conflict was to arise in Russia, I wouldn’t have taken that person very seriously – as most other people wouldn’t have. Now we’re the victim of our own success in Russia, like so many other companies.

What’s the game plan for Russia?

We have to deal with the consequences. Consumer confidence there is down, and that hurts us. But things won’t remain this bad forever. I believe in Russia’s long-term growth potential. Being a market leader, we’ll be better off than others.

In the North American sporting goods market, Adidas has slipped to third place, behind Under Armour. Nike remains the undisputed market leader. What’s going wrong over there?

We don’t like being booted from second place. We have invested too little over there. But with our new management under Mark King, we’re on the attack. He also has more funds and have have signed 500 football, baseball and basketball star players to wear our shoes in the future. We were also able to attract fashion icons such as Kanye West and Pharrell Williams.

So when will you overtake Under Armour again in the United States?

You can’t catch up from one day to the next – the market is very competitive. But we will grow again in the United States this year. The big brand campaigns that we will launch in February will contribute to this growth, and not just for Adidas but also for Reebok.

Will the company grow overall again this year?

What do you mean by again? We grew 6 percent in 2014, adjusted for currency effects. The growth was affected by our golf brand, Taylor Made, which was down. But to answer your question, yes, we will grow in 2015 – with all brands.

Your archrival, the global market leader Nike, is growing much faster. Isn’t that a problem?

Nike is a formidable competitor that is having a good run, but not everywhere in the world. We are now the market leader in South Korea and are growing much faster in many emerging economies. Nike is doing well in North America and western Europe, but we’re set for growth in Europe as well. In Germany, 2014 was a record year for us. That’s why we don’t have to hide. In the end, we’re pushing ourselves ahead.

What about the weak euro?

There are two opposing effects in currencies. On the one hand, our revenue benefits from the strong dollar. On the other , the continuously weak ruble is eating up revenues. It’s hard to predict the overall effect because the currencies are currently so volatile.

There were rumors back in fall that hedge funds will invest in Adidas and push for your replacement. Have you been contacted by funds?

I only know these rumors from the media. Not a single representative came to me personally and wanted to discuss my future. But, of course, we’re always in touch with our investors.

You plan to present the next long-term strategy in March. What will it look like?

We will specify where and how we plan to grow and where we want to invest. But you will have to wait for March for more details.

 

Joachim Hofer reports for Handelsblatt from Munich. To contact the author: hofer@handelsblatt.com.

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