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Monday, March 18, 2024
March 18, 2024

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Adidas forecasts 15 percent annual growth through 2020

The Columbian
Published:

PORTLAND — Adidas will increase profit 15 percent annually and grow sales at a high single-digit rate under an ambitious five-year financial plan announced Thursday. The company also said it will pay 30 to 50 percent of profit in dividends, up from a previous range of 20 to 40 percent.

“The new business plan is built around three major strategic choices: speed, cities and open source,” an Adidas statement says.

The stakes for the plan couldn’t be higher for Adidas, the world’s second-largest sporting goods brand, which has steadily lost ground to Nike, its archrival and the world’s number one. In North America — the world’s biggest sporting goods market — Adidas dropped to third-biggest brand and now trails Under Armour.

“Our new strategy is built on speed, focus and openness,” Adidas chief executive Herbert Hainer said in a statement. “As a result, we will accelerate our growth story and deliver superior returns to our shareholders. I am very much looking forward to ‘creating the new,’ together with the Adidas Group’s more than 53,000 employees across the globe.”

Hainer led an Investor Day 2015 event Thursday in the company’s headquarters home of Herzogenaurach, Germany. Mark King, president of Portland-based Adidas Group North America, was a speaker.

How much of this five-year plan Hainer will be allowed to oversee is an open question. The Adidas board announced in February that it has launched a search for a successor to Hainer, 60, whose contract ends in 2017. Hainer, who has served about 15 years, experienced perhaps his most tumultuous year in 2014 as the company’s stock dropped 38 percent in value.

The five-year financial plan replaces its predecessor, “Route 2015,” announced in 2010. The company declared the Route 2015 goals unattainable last July, citing the volatility of the Russian market, as well as disappointing sales and excess inventory for Taylor-Made Adidas Golf. In February, the company announced it was selling its Rockport shoe division.

Entering Thursday’s meeting, Adidas faced criticism for the speed with which it responded to consumer tastes. Inevitably, the criticism attached an example of a competitor who has beaten them handily at fast turnaround: Nike.

Adidas “unleashed open source,” the statement said, “a strong commitment to further strengthen the company’s ties with its consumers. The Adidas Group will engage with consumers, athletes, retailers and partners more than ever before, make them become part of its brands and, as a result, increasingly build brand advocacy.”

Adidas generated 14.5 billion in Euros (nearly $16 billion) in 2014, making it the world’s second-largest sporting goods company to Nike, which had $27.8 billion in sales for the fiscal year that ended in May.

“We are closest to every consumer with our unique brand portfolio,” said Eric Liedtke, executive board member responsible for global brands. “In the future, we will not only talk with our consumers. We will be the first sports company that invites athletes, consumers and partners to be part of its brands.”

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