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5 Big Investments Adidas Is Making to Boost Sales and Profitability Over the Next Four Years

Adidas has unveiled a set of ambitious targets for the next four years as part of a new companywide growth strategy.

At its annual Investor Day meeting, the German sportswear giant presented “Own the Game,” which has the primary goal to “significantly increase” sales and profitability as well as “gain market share” by 2025. It aims to improve revenues by an average of 8% through 10% each year on a currency-neutral basis and projected net income from continuing operations to advance “substantially” by between 16% and 17% per year over that same timeframe.

“Our strategic focus is on increasing credibility of the Adidas brand, elevating the experience for our consumers and pushing the boundaries in sustainability,” CEO Kasper Rorsted said in a statement. “To successfully execute our strategy, we will continue to significantly invest into our people, our brand and the digital transformation of the company.”

For the 2021 fiscal year alone, Adidas anticipates currency-neutral sales to rise at a mid- to high teens rate. Its profits for the period are forecasted to climb to a level of 1.25 billion euros to 1.45 billion euros (or $1.49 billion to $1.73 billion at current exchange).

Here, the targets the Three Stripes has set for the next few years and the investments it plans to make for a “successful future.”

Doubling down on sport and lifestyle

According to Adidas, more than 95% of revenue growth leading up to 2025 is expected to come from five categories: football, running, training and outdoor, as well as lifestyle. It will also introduce the subcategory of sportswear as the athleisure trend continues to take off in pandemic times.

What’s more, the company shared a “cross-category plan” in an effort to attract more female customers, with the goal of accelerating currency-neutral net sales for its women’s business at a mid-teens rate on average per year between 2021 and 2025.

Living in a digital future

Driven by investments of more than 1 billion euros (or $1.19 billion) over the next four years, Adidas intends to digitize its core processes across its supply chain, from enhancing 3-D design capabilities to sourcing its products. It also revealed plans to hire 1,000 data and technology workers this year, as well as invest in enterprise resource planning system SAP S/4HANA. By 2025, the brand seeks to have the “vast majority” of sales generated with products that were both created and sold digitally.

Transforming into a direct-to-consumer business

Adidas predicted that sales through DTC channels will account for about half of its total net sales by 2025. Its own e-commerce revenues are expected to double from currently 4 billion euros (or $4.77 billion) to between 8 billion euros and 9 billion euros (or between $9.54 billion and $10.73 billion).

In addition, the company shared plans to triple the number of people who are part of its membership program from the current level of roughly 150 million to around 500 million, as well as build engagement with customers in its existing “key cities” portfolio by adding Mexico City, Berlin, Moscow, Dubai, Beijing and Seoul. (It currently has six “key cities”: Tokyo, Shanghai, Paris, London, New York and Los Angeles.)

Innovation

Among Adidas’ most popular innovations over the past years were its Boost cushioning technology and Parley for the Oceans partnership, which enabled it to produce performance sneakers from upcycled marine plastic waste. Next year, it will launch Futurecraft.Strung, a running shoe that combines the work of engineers and robotics. It also plans to debut its Ultraboost DNA Loop in larger quantities in the coming months. (Once the shoes reach the end of their life cycle, they can be shredded into pieces and reused.)

Going sustainable

Although sustainability has long appeared integral to its business, Adidas intends to expand its commitment to eco-friendly materials and practices: According to the company, nine out of 10 of its “articles” or products will be sustainable by 2025. It suggested that it would continue to innovate its existing three-loop system: recycled loop (made from recycled materials), circular loop (made to be remade) and regenerative loop (made with natural and renewable materials). It has also previously announced that it would use only recycled polyester in every product starting 2024.

Moreover, within the next four years, the athletic behemoth plans to reduce its carbon footprint per product by 15% and achieve climate neutrality in its own operations. It shared that it was working with partners in its supply chain to reduce energy and material consumption.

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