Björn Gulden is currently one of the most sought-after managers in Germany. With Puma, he has just completed the most successful year in the company’s history. As the new boss of the much larger competitor Adidas, the former soccer professional is fulfilling a lifelong dream that initially looks a bit like a nightmare. In the first year of his responsibility for the three-stripe brand, Gulden could make the first Adidas loss in more than 30 years. He takes over the company in one of the most difficult situations in recent history – and doesn’t find that surprising. “You don’t change coaches when you’re a champion,” he said at the presentation of the annual figures on Wednesday in Herzogenaurach.
Gulden came to Franconia in 1984, back then as a young footballer. He only made four appearances at 1. FC Nürnberg. “I was a bad buy,” says Gulden today. It is this slightly mischievous self-mockery that Gulden likes and the closeness to sport that makes many industry insiders certain that Gulden is the right one after Kasper Rorsted, the numbers man, that gets Adidas back on track. Gulden jokes that Rorsted had to be dismissed with a golden handshake worth up to 16 million euros: “I didn’t get anything from Puma.”
The 57-year-old raves about his new employer. Nobody in the industry has such an archive of classics as Adidas, nobody has the technical possibilities and nobody has the breadth of stars who carry the brand to the outside world. The company sells 419 million pairs of shoes per year, as well as 482 million pieces of clothing and 117 million pieces of hardware such as footballs. “I would be the biggest fool on the planet if I hadn’t done this job,” says Gulden.
Unsold stock
But the job will be tough. Adidas sits on unsold stocks of at least one billion euros. The warehouses are full in the giant markets in China and the USA, among others. “The remedy against stocks are rebates,” Gulden admits. At least until the summer, there is a risk of a price war in the industry, which will put pressure on sales. The Adidas share, which is listed in the Dax, initially gave way on Wednesday, but shook off its losses by the end of trading and ended trading with a plus of more than two percent.
The consequences of the ill-fated alliance with scandalous rapper Kanye West are still unresolved. The items designed by West brought Adidas billions in sales – until the musician’s public statements became so unbearable that Adidas had to part with him. Nobody currently knows what will happen to the shoes and clothes of the Yeezy series. Gulden cannot even rule out the possibility that they will have to be completely destroyed. The problem could push operating profit down by up to 700 million euros this year.
Sales, which Adidas generated with almost 60,000 employees, grew by only one percent after currency adjustments to 22.5 billion euros last year, profit from continuing operations collapsed from almost 1.5 billion euros to 254 million euros. While Adidas had to correct its forecast three times in a row, competitor Puma was able to celebrate records.
Sales decline expected for this year
Adidas is even expecting a drop in sales of up to just under 10 percent this year. Adidas cites the geopolitical problems in Europe and Asia and inflation, which also affects North America, as further reasons for the development. Adidas has recently been significantly more exposed to these problems than others in the industry. In retrospect, it is clear: Gulden’s predecessor, Kasper Rorsted, had relied too much on the once highly profitable market in China, gained market share there – and ultimately suffered more than the competitors from the consequences of political regulation and Covid closures in the Middle Kingdom.
“2023 will be a transition year to lay the foundation for 2024 and 2025,” says Gulden. Then he wants to attack again, especially with a focus on the brand. To this end, Adidas is reorganizing the management team around Gulden. The new boss will take responsibility for the brands themselves, and the Dane Brian Grevy is leaving the company. Even manager veteran Roland Auschel has to leave Adidas after 33 years and will be replaced by Arthur Hoeld. CFO Harm Ohlmeyer, on the other hand, can continue for five years.
After the slump in profits last year, shareholders have to adjust to a significantly lower distribution. They are to receive a dividend of EUR 0.70 per share after EUR 3.30 in the previous year, as Adidas further announced. In 2022, the group was struggling with high inflation and problems in China. Adidas has been more successful there for years than industry leader Nike and local rival Puma.
