Adidas’s depressed valuation may soon catch the eye of rivals, writes aimeedonnellan
Adidas CEO Bjorn Gulden attends the company’s annual news conference in Herzogenaurach, Germany, March 8, 2023. REUTERS/Heiko Beckeris a vulnerable underdog among sportswear champions. After a disastrous breakup with the musician formerly known as Kanye West, the $28 billion sneaker maker is slashing dividends and heading for the first loss in decades. Boosting marketing spending could deliver success, but it would be a slog. With no easy win, larger rivals may soon come sniffing.
Adidas’s new boss Bjorn Gulden took the helm in January. That was just two months after the company cut ties with West, now known as Ye, after the singer posted social media comments that readers deemed antisemitic. Gulden hasa turnaround, but warned on March 8 that Adidas could face a 700 million euro operating loss if it fails to rebrand and sell thousands of Yeezy-branded trainers still in storage.
Gulden may have to splurge. The German group now spends less on marketing as a percentage of sales than it did in 2015. This made sense when Adidas could count on the 200-to-500-euro-apiece Yeezy trainers delivering an estimated 40% net income margin, 35 times higher than the group’s net income margin last year. But with no alternative bestseller, $180 billion NikeHigher costs, however, risk riling investors. Last year, Adidas spent 12.3% of its 22.
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