Adidas on Thursday announced an "ambitious five-year financial plan," called "Creating the New," which would see the company increase profits by 15% annually and "grow sales at a high single-digit rate," according to Allan Brettman of the Portland OREGONIAN. The company said that it "will pay" 30-50% of profit in dividends, up from a previous range of 20-40%. Brettman writes the stakes "couldn't be higher" for adidas in North America, where the company "dropped to third-biggest brand and now trails Under Armour." The new plan "replaces" its '10 predecessor, "Route 2015." 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." Adidas generated $15.9B in sales in '14, "making it the world's second largest sporting goods company to Nike," which had $27.8B in sales for the FY ended last May (OREGONIAN, 3/26). In N.Y., Ellen Emmerentze Jervell reported adidas will "speed production while increasing its presence in major cities and investing in its core brands." Adidas "also plans to expand its e-commerce business" to more than $2.2B by '20. The company said that it "plans to 'over-proportionally' invest in talent and marketing" in six key metropolitan areas around the world: L.A., N.Y., London, Paris, Shanghai and Tokyo. Adidas Head of Global Sales Roland Auschel: "If we win running in New York and Los Angeles, we will win running in the U.S." (WALL STREET JOURNAL, 3/26). In London, James Shotter reported the new plan is an effort by adidas to "revive its fortunes." After a "long streak of success," adidas has endured a "difficult" 18 months, issuing two profit warnings as "turmoil in Russia, and a downturn in its golf business, hit its performance." Adidas shareholder Union Investment Portfolio Manager Ingo Speich said, "The main problem for adidas is profitability. If you assume they achieve their revenue and profit goals and work out what this would mean for their margins, then the strategy is not very ambitious. I would have liked to see them focus on profitability. The higher dividend is nice, but that is not why you invest in adidas. It is just a placebo?" Analysts at Morgan Stanley said that the plan "bore similarities" to adidas' last five-year plan. They wrote, "First thoughts -- Déjà vu?" (FINANCIAL TIMES, 3/26).
