Executive Briefings

New Adidas CEO Plans Fast-Fashion Focus to Catch Up to Nike

Adidas AG's new chief executive officer is doubling down on surging sales of casual sneaker lines like Stan Smith and Tubular to transform the German sportswear maker into a fast-fashion business and gain ground on larger rival Nike Inc.

Sales of so-called lifestyle products from the Originals, Neo and Y3 lines rose 45 percent in 2016, more than triple the pace of performance sports gear, the company said. CEO Kasper Rorsted said focusing on fast-fashion and stripping away non-core businesses like golf and hockey will increase profit more than expected, lifting the shares to a record.

“The lifestyle market is a lot bigger than the sports market, so we have to participate in that,” outgoing Chief Financial Officer Robin Stalker said at a press conference, adding that casualwear now makes up about 30 percent of sales. “There are the Stan Smiths and Superstars, but there are also other products we will manage over many seasons.’’

The increased forecasts add to the momentum of a business that raised its outlook four times last year, providing a springboard for Rorsted after he took the reins from longtime CEO Herbert Hainer about six months ago. Adidas is betting big on a fashion trend that has also lifted smaller German sportswear brand Puma as consumers shift away from hard-core providers of athletic gear like Under Armour Inc.

Adidas’s new leader said he plans to “over-invest” in the U.S., where the company trails Nike, and speed up its supply chain to sell more goods at full price. Adidas also plans to quadruple online sales to 4bn euros ($4.2bn) by 2020 and divest itself of the CCM hockey business as it focuses on its namesake label and the Reebok brand.

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Sales of so-called lifestyle products from the Originals, Neo and Y3 lines rose 45 percent in 2016, more than triple the pace of performance sports gear, the company said. CEO Kasper Rorsted said focusing on fast-fashion and stripping away non-core businesses like golf and hockey will increase profit more than expected, lifting the shares to a record.

“The lifestyle market is a lot bigger than the sports market, so we have to participate in that,” outgoing Chief Financial Officer Robin Stalker said at a press conference, adding that casualwear now makes up about 30 percent of sales. “There are the Stan Smiths and Superstars, but there are also other products we will manage over many seasons.’’

The increased forecasts add to the momentum of a business that raised its outlook four times last year, providing a springboard for Rorsted after he took the reins from longtime CEO Herbert Hainer about six months ago. Adidas is betting big on a fashion trend that has also lifted smaller German sportswear brand Puma as consumers shift away from hard-core providers of athletic gear like Under Armour Inc.

Adidas’s new leader said he plans to “over-invest” in the U.S., where the company trails Nike, and speed up its supply chain to sell more goods at full price. Adidas also plans to quadruple online sales to 4bn euros ($4.2bn) by 2020 and divest itself of the CCM hockey business as it focuses on its namesake label and the Reebok brand.

Read Full Article