New Adidas chief pledges US investment and focus on lifestyle lines
New Adidas ceo Kasper Rorsted is to invest in surging sales of casual sneaker lines like Stan Smith and Tubular to transform the German sportswear firm into a fast-fashion business and gain ground on larger rival Nike.
Sales of so-called lifestyle products from the Originals, Neo and Y3 lines rose 45pc in 2016, more than triple the pace of performance sports gear, the company said yesterday. 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 cfo Robin Stalker said at a press conference, adding that casualwear now makes up about 30pc 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 long-time 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 US, where the company trails Nike, and speed production so the company can get clothes to stores faster and sell more goods at full price. Adidas also plans to quadruple online sales to €4bn by 2020 and divest itself of the CCM hockey business as it focuses on its namesake label and the Reebok brand.
"We are 18 months into our strategy," Rorsted said. "We still have a lot ahead of us to deliver." The company said profit should rise 20pc to 22pc a year on average through 2020, compared with a previous projection for growth of about 15pc, lifting its shares as much as 9.2pc. (Bloomberg).