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Adidas CEO Says Race Issues at the Brand Were a ‘Humbling Experience’ For Him

Adidas AG CEO Kasper Rorsted is stepping into the driver’s seat in hopes of righting the brand’s diversity and inclusion challenges.

During a press conference today, following the release of the Germany-based company’s second-quarter earnings results, Rorsted said he has been having conversations with “people across the world” … “almost every single day” since he’s taken over the firm’s HR department.

“In America, we have not made enough progress with the Black community,” Rorsted said. “And we are taking that very seriously …  It has been a humbling experience for me. The company and I are deeply committed to correcting this situation and building a company everybody can be proud of.”

In June — stoked by national unrest over racial injustice stemming from the killing of George Floyd — years of internal dissension surrounding the company’s treatment of Black and other minority employees, came to a head. Protests by Black employees and their allies as well as media reports recounting purported instances of discrimination at the brand’s North America HQ in Portland Ore., culminated in late June with the resignation of Karen Parkin, the company’s head of Global Human Resources.

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Earlier that month, a 13-member coalition representing more than 200 Adidas employees called for Parkin’s resignation. They cited comments she made last year at a company meeting in Boston at Adidas-owned brand Reebok, where she described concerns over racial disparities as “noise” and further suggested the company did not need to take action as the criticisms were only present in its North America offices for Adidas.

The same coalition had also already delivered to Adidas North America management, including president Zion Armstrong, a 32-page deck, dubbed “Our State of Emergency.”

In addition to claims that management “doesn’t grasp the discrimination minorities might face” and that “the difference in perception is largest in Germany,” the document had listed four major “asks.” The coalition had demanded the company invest in its Black employees; the Black community; the fight for racial justice and change for Black people — and demonstrate accountability.

Adidas responded with several new D&I initiatives: Since June 9, it established a global Committee to Accelerate Inclusion & Equality; announced new minimum targets in the U.S. for increased representation of Black and LatinX people; pledged 50 university scholarships in the U.S. each year for Black students at partner schools; and is investing $120 million toward U.S. initiatives focused on ending racial injustice and/or supporting Black communities through 2025.

Rorsted doubled down on the importance of those initiatives when he addressed diversity and inclusion during a conference call with investors today to discuss the firm’s second quarter results.

“Diversity and inclusion are one of the most important [areas] to me personally, to my board colleagues and to everybody that is,” Rorsted said. “And upon [our] reflections, we have made commitments globally. We have established a committee to accelerate inclusion [and equality] that I’m personally sponsoring. We have strengthened our anti-discrimination policy and are reforming our hiring process. We’re celebrating diversities like Black History Month, Lunar New Year, International Women’s Day, Pride … and many more.”

According to its second-quarter earnings report, for the three months ended June 30, Adidas incurred a net loss of 306 million euros, or $362 million at current exchange, compared with the prior year’s income of 462 million euros. It logged a loss of 1.45 euros per share, or $1.72, versus earnings per share of 2.33 euros last year. Revenues dropped 35% to 3.58 billion euros, or $4.24 billion. Market watchers had predicted a loss of $1.62 per share and revenues of $3.34 billion.

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