Adidas’ newly minted CEO teased some new areas of focus for the German athletic brand, which is still reeling from the loss of its Yeezy business in October and other economic headwinds.
The company on Friday reported first-quarter earnings that beat expectations. Still, revenues fell 1% to 5.27 billion euros (or $5.81 billion) in the first quarter. The loss of Yeezy business caused a nearly 400 million euros, or $441 million, sales hit to the company in the quarter.
CEO Bjørn Gulden, who joined Adidas in January, warned of a “bumpy year” with “disappointing numbers” ahead. He sees 2023 as a transition year meant to set up the company for growth in 2024 and beyond. He also discussed broad goals for how Adidas should think about growth, calling out the company’s no. 1 competitor, Nike.
“I do think that we need to have a different business model than Nike,” Gulden said, explaining how Nike’s connection to “American street culture” makes sense for the Swoosh, given its global headquarters in the U.S. “We need to do it in a different way.”
Previously, the Yeezy brand was one of Adidas’ strongest connection to pulse of American culture. Now, Gulden said Adidas will need to focus on lifestyle “creation centers” in key outposts like L.A., Tokyo and Shanghai to help the brand execute on local demand in these regions.
“I think that [Adidas] has a special DNA that should have a business model different than anybody else,” Gulden said, adding that the company will have likely unveil a new strategy at the end of 2023 focusing on this key factor.
One focus, Gulden said, will be to find a replacement for the running-based Yeezy silhouettes that lived in the fast growing running lifestyle category, which is currently dominated by contemporary brands like Hoka and On.
“There is very little running that is coming from us,” Gulden said. “And that’s one of the special projects that we’re now working on.”
Gulden also said Adidas needs to focus on smaller sports outside of the “big five,” an area he said Nike has excelled in.
“I think that during COVID and the last years, [Adidas] streamlined too much, so we lost a little bit of that edge which we’re trying to find back again,” he said.
Gulden also called out the strength of Adidas core franchises, such as the retro Samba, Gazelle and Campus styles that have recently surged in popularity.
“We have, compared to Nike, a lot more franchises,” Gulden said, explaining that the challenge is determining which franchises to highlight when. “I think this is where we have not been as good as our friends at Nike.”