After a tough Q4 marred by increasing speculation about Reebok’s future and the struggling TaylorMade Golf brand, Adidas Group’s executive team convened in Herzogenaurach, Germany this week to lay out a five-year strategy for the company. Accelerated growth seemed to be the recurring theme at the meeting of the minds for world’s second-biggest sportswear company behind Nike.
FN recaps the five key takeaways from the two-day meeting:
Growth Goals: The company has projected currency-neutral sales growth at a high-single-digit rate, on average, per year until 2020; 15 percent increase in net income on average per year; expansion of its e-commerce business to above 2 billion euros; and increased targeted dividend payout ratio to between 30 percent to 50 percent compared to the previous ratio of 20 percent to 40 percent.
Six City Push: Adidas said it will focus its marketing on Los Angeles, New York, London, Paris, Shanghai and Tokyo.
Production Innovation: With its teen fashion brand NEO, Adidas said it has already set new standards with regard to speed-to-market and that it will draw on its experience in order “to roll out this mantra of speed” across the entire company.
Hainer’s Commitment: Despite criticism after having to abandon the targets he set in the previous five-year plan, Adidas’ CEO Herbert Hainer said he’s prepared to do everything he can to get the new plan “off to a great start” although the strategy extends beyond the time he has left with the firm. Hainer’s contract is expected to end in 2017 and the company announced last month that its board has launched a formal search for his successor.
Bullish on Competition: If the company is feeling the pressure of the recent successes of Nike and Under Armour, it was hard to tell by management’s outlook. “Of course we look at who the competitors are and what they’re doing,” said Mark King, president of Adidas North America. “But we don’t build our strategy around blocking them.”
The company said it will focus investments across its core brand portfolio of Adidas, Reebok and TaylorMade and will increase brand desirability, primarily by offering more options for product customization.