Adidas is tired of being runner up to Nike in North America. This year, the company is aiming to bolster its U.S. presence with brand campaigns geared towards the market and its most popular sports. And if the buzz created by Kanye West's collaboration is any indication, it's on the right track.
In 2014, the German sportswear company saw currency-neutral sales increase 6 percent across its brands, falling short of its goal by a few percentage points. Double-digit sales growth at its flagship brand and mid-single-digit sales growth at Reebok helped drive the increase. Accounting for currency changes, the picture is less bright: Revenue grew 2 percent to $16.01 billion, but gross profit decreased 1 percent due to operating costs.
Sales grew in all regions except North America, emphasizing the need to refocus on the region. Fittingly, outgoing Adidas-Group CEO Herbert Hainer used sports metaphors to communicate how committed the company is to turning things around in 2015. In a letter to the shareholders, he said: "True champions come out and show their worth after defeat."
Things that contributed to "defeat" in 2014 include an unpredictable golf market: The number of players declined, resulting in too much inventory, the closure of a production facility in the U.S. and a 15 percent decrease in the workforce. As a result, sales decreased 28 percent. The Russian economy was another major problem. Since Adidas is the leading sportswear company there, it felt the impact of decreased customer spending and was forced into a lot of promotional activity.
Adidas will release a detailed strategy for the next five years at the end of March, but for now, it plans to capture American customers by focusing on football, baseball and college sports, as well as continuing to bring external talent like West to its new design studio in New York. Hainer promises that "the roadmap for the future is clear."