Sep 30, 2016

    New adidas boss has big task of chasing Nike


    CLOSING the gap on clear market leader Nike is the challenge facing new adidas boss Kasper Rorsted when the Dane takes charge of the world's second biggest sportswear brand from the start of October.

    Investors are banking on Mr Rorsted, 54, repeating improvements to profitability he achieved at consumer goods maker Henkel, and the adidas share price has risen by around two thirds since his appointment was announced in January.

    Ingo Speich, a fund manager at adidas shareholder Union Investment, said he hopes Mr Rorsted will scrutinise the adidas product portfolio and its sales structure to find ways to boost lagging margins.

    "I expect small measures rather than a bombshell. But in 12 months to 18 months, if the margin is still where it is now, it will be difficult for the shares," said Mr Speich.

    Mr Rorsted's performance at Henkel, the maker of Schwarzkopf shampoo and Loctite glue, is being examined for clues as to what he will do at the sportswear group, which supplies football jerseys to Manchester United and world champions Germany.

    At Henkel, Mr Rorsted culled 80 per cent of the firm's brands, pushing top names at the expense of local labels. He kept a tight control on costs.

    Adidas has started to chip away at Nike's dominance in the United States market, thanks to heavy marketing and collaborations with singers Kanye West and Pharrell Williams as well as top sports stars.

    Adidas had 2,722 stores at the end of last year and plans to add another 500 to 600 by 2020 and quadruple e-commerce sales to 2 billion euros (S$3 billion) by then.