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When Kasper Rorsted came, he raised the bar for the Adidas team.

Rorsted had only been in office for a few months when he raised medium-term planning as the new CEO in spring 2017.

He dared to do more than his predecessor Herbert Hainer.

Above all, sales should increase more strongly.

“Creating the new”, we all “create new things” was the name of the program.

The Dane Rorsted, who had just turned 59, initially achieved great success and exceeded the goals he had set himself.

Or as a manager of a large bank put it at the time: "Rorsted can walk over water."

The times seem over for the time being.

Because the current Adidas program is running out and the group is losing its strength on the home stretch.

The gap to world market leader Nike has not diminished during Rorsted's tenure.

Adidas has significantly improved returns and increased sales by double digits - but the US competitor was even better.

Advantage of Puma and Nike: high pressure on Rorsted

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Roughly calculated, the gap between the rivals in 2017 was a good seven billion euros.

In 2019, the last year before the corona pandemic, there were already eleven billion.

Adidas sales had climbed to the record value of 23.6 billion euros.

If currency effects are factored out, the result was an increase of six percent.

However, in the fiscal year ended March 2019, Nike increased its sales by eleven percent to $ 39.1 billion.

A study by the major Swiss bank UBS states soberly: "The performance of the Adidas Group has lagged behind the development of its competitors since 2018."

Rorsted now has to boost sales in order not to fall further behind.

“Adidas has recently lost speed,” says Thomas Jökel, Union Investment fund manager.

"The competitors Nike and Puma do better."

Rorsted is therefore under high pressure of expectation when he presents his first own five-year plan on March 10th.

Because of the corona pandemic, the future program will be presented virtually from the corporate headquarters in Herzogenaurach, Franconia.

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The causes are varied: weaker product launches, delivery delays for textiles and the loss of good managers.

The “return of Puma” on the sports market and a convincing range of products from Nike created additional pressure, according to UBS.

Critics speak of "Kasper Rotstift"

Critics accuse Rorsted of having improved returns, to the delight of shareholders, but of having done too little for new products.

They call him "Kasper Rotstift".

However, fund manager Jökel warns of a final verdict: "I see falling behind as a cyclical problem." It will only be two years' time that we will see where the path is going.

It is the cool / not-cool wave movements in the sporting goods industry that give brands a tailwind or make them slow-moving.

What is hip today doesn't have to be tomorrow.

Some brands rise rapidly and burn up again quite quickly.

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As the industry says, it would be ideal if Adidas succeeded in presenting an innovation that would generate sales, such as the Ultraboost running shoe.

The premiere was six years ago.

In the German neighborhood duel, Puma is currently more innovative than Adidas.

The group has just presented a new running shoe technology.

"We are growing faster than the market, so we are gaining market share," said Puma boss Björn Gulden last week at the presentation of the 2020 balance sheet. He does not want to reveal the figures: "We are concentrating on our business."

Puma is now number three in the market worldwide, albeit by far.

It is chic again to wear Puma or to play sports with it as a paid advertising medium, as, for example, the Brazilian soccer star Neymar does.

The popularity of the brand is crucial for a sporting goods manufacturer, after all, anyone can make T-shirts.

They only become valuable through the brand.

And the metrics for brand popularity are currently not particularly favorable for Adidas.

According to the UBS analysis, it is remarkable that even in Germany the recommendation rate for Nike is slightly higher than that of Adidas.

In China it is still the other way around.

But in the USA, the world's largest sporting goods market, Nike ranks well ahead of Adidas, Under Armor, New Balance and Puma when it comes to recommendations.

Wider range for the home office era

In the new Adidas medium-term plan, which Rorsted will present shortly, Asia and especially China should therefore play a key role.

The entire region is already a larger sales market for the Group than Europe or North America.

Adidas is also extremely dependent on Chinese suppliers; the People's Republic is the third largest supplier of shoes, number two for textiles and number one for accessories.

Without China, Adidas would stagger.

The sporting goods company will also learn lessons from the corona pandemic for its business.

Consumers have been ordering online for weeks.

Rorsted is likely to further strengthen this sales channel, possibly even at the expense of stationary retail.

In addition, people are now sitting casually in sneakers and sweatpants in the home office instead of in suits and suits.

So Adidas should expand its offer for employees who live casually at home.

After all, the Adidas boss benefits from the fact that there is no end in sight to the megatrends of health and sport.

The industry remains a growth market.

Presumably, the company will also emphasize the topic of sustainability even more.

There is talk of a recycling instead of throw-away economy.

Years ago, Adidas introduced eco-friendly sneakers made from plastic waste.

In the long term, there should be biodegradable shoes.

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"Adidas has so far best linked the topic of sustainability and products, because they are at the top," says fund manager Jökel.

When it comes to new products, analysts expect further variants of the Ultraboost running shoe or Futurecraft 4D, in which a large part of the sole is printed three-dimensionally from plastic using a special process.

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One building block of the Adidas future has already been announced: The second brand Reebok is sold.

Rorsted's predecessor, Hainer, spent a good three billion euros on this 15 years ago.

So he wanted to come on a par with Nike.

That failed completely.

Reebok generates less sales today than when it was bought.

Because the company hardly makes any money, the Adidas return is also diluted.

So selling Reebok will help improve returns.

The analysts at UBS believe that Rorsted used the corona crisis year 2020 to clear the warehouse internally.

In a kind of restart, the return could improve again in the future, even if Nike will remain at the top in this regard.

The wish of ex-Adidas boss Hainer - today President of FC Bayern Munich - to rise to the US rival in terms of sales, is likely to remain a dream.

This text is from WELT AM SONNTAG.

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Source: ZGB