Outgoing adidas CEO Herbert Hainer "presented results on Thursday that show the German sportswear company is making a comeback on its home turf of western Europe" and in football, but still with much to do to catch Nike, according to Emma Thomasson of REUTERS. Hainer "is handing over to Henkel's Kasper Rorsted in October after the longest-serving boss of a German blue-chip company came under pressure from investors for failing to keep pace with bigger U.S. rival Nike."
Adidas "has fallen into third place in the key U.S. market" behind Nike and fast-growing Under Armour and seen Nike threaten its dominance in football and western Europe.
In response, adidas "closed stores in Russia, put its troubled golf business up for possible sale and hiked marketing spending by more than a fifth."
Hainer: "We realigned and reorganized our business, rolled up our sleeves and set to work. The result is a textbook example of a perfect comeback in sport." Adidas said that its fourth-quarter net loss narrowed to €44M on sales up 15% to €4.167B ($4.53B), "broadly meeting average analyst forecasts after the company published provisional results last month."
Sales of the core adidas brand grew a currency-neutral 16%, "accelerating in particular in western Europe and North America" to 31% and 12% respectively, driven by strong demand for football and lifestyle products.
Hainer "expects another year of double-digit growth in both regions," as well as in greater China in '16, helped by the European and Copa America football tournaments and the Olympics.
Hainer said,
"Our order books are full across all major performance and lifestyle categories. And our brands are set to shine at this year's major sporting events" (REUTERS, 3/3). BLOOMBERG's Andrea Felsted wrote it is "not often that a sportswear brand opens New York Fashion Week." Adidas' collaboration with Kanye West gained "huge publicity." Of course, it is "not just Kanye helping Adidas with his Yeezy tie-up." A generation of "fitsters" are taking sportswear out of the gym and onto the street, "while the European Football Championships later this year should give sales an extra kick." Investors "certainly believe Adidas has turned a corner." The shares are up more than 12% in '16, compared with a 5% decline in Germany's Dax Index.
But "using rap stars to create buzz doesn't come cheap." The German company "lifted its marketing spend -- including in-store promotions -- by 31 percent in the final quarter of 2015." For the full year, higher marketing spending "pushed up other operating expenses as a percentage of sales from 42.7 percent to 43.1 percent" (BLOOMBERG, 3/3).
