Corporate Strategy

Everything we do is rooted in sport. With sport playing an increasingly important role in more and more people’s lives, on and off the field of play, we operate in a highly attractive industry. Through our authentic sports brands, we push the boundaries of products, experiences and services to drive brand desire and capitalize on the growth opportunities in sport, as well as in sports-inspired casual wear.

(Mission Statement)

OUR CORE BELIEF: Through sport, we have the power to change lives

The importance of sport, however, goes far beyond that. Sport is central to every culture and society and is core to an individual’s health and happiness. Therefore, we believe that, through sport, we have the power to change lives. And we work every day to inspire and enable people to harness the power of sport in their lives.

OUR MISSION: TO BE THE BEST SPORTS COMPANY IN THE WORLD

It is our mission to be the best sports company in the world. Best means that we design, build and sell the best sports products in the world, with the best service and experience, and that we do so in a sustainable way. Best is what our consumers, athletes, teams, partners, media and shareholders will say about us. We are confident that we will see improvements with regard to market share, leadership and profitability once people are saying that we are the best.

STRATEGIC BUSINESS PLAN: ‘CREATING THE NEW’

‘Creating the New’ is our strategic business plan until the year 2020. Our ambition to further drive top- and bottom-line growth by significantly increasing brand desirability builds the core of ‘Creating the New’. The strategic business plan therefore focuses on our brands as they connect and engage with our consumers. This consumer-centric approach is driving significant improvements in the desirability of our brands and has increased our relevance with consumers around the globe. As a result, we have gained market share in those categories, markets and cities that we have identified as future growth drivers for our company.

Our strategic business plan: ‘Creating the New’

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  • Brand Desire

    ‘Creating the New’ is our strategic business plan until the year 2020. Our ambition to further drive top- and bottom-line growth by significantly increasing brand desirability builds the core of ‘Creating the New’. The strategic business plan therefore focuses on our brands as they connect and engage with our consumers. This consumer-centric approach is driving significant improvements in the desirability of our brands and has increased our relevance with consumers around the globe. As a result, we have gained market share in those categories, markets and cities that we have identified as future growth drivers for our company.

    01/06
  • Culture

    We have great talents in our organization who work with passion for sports and our brands. Our people bring our strategy to life and our culture makes the difference in achieving our long-term goals. We are convinced that a culture of Creativity, Collaboration and Confidence (the 3Cs) is a key enabler for us to ‘Create the New’.

    02/06
  • Speed

    Driving brand desirability begins with putting our consumers at the heart of everything we do and serving them in the best possible way. This involves ensuring that consumers always find fresh and desirable products where and when they want them and with an unrivaled brand experience. This, in turn, means being able to anticipate what consumers want and reacting accordingly in a timely manner. Being fast will give us a decisive competitive advantage. The benefits include higher product availability, reduced inventory risk, incremental net sales and higher margins. Speed is therefore a critical and powerful lever for us.

    03/06
  • Cities

    Urbanization continues to be a global megatrend. Most of the global population lives in cities and already today cities account for around 80% of global GDP. Cities are shaping global trends and consumers’ perception, perspectives and buying decisions. To be successful in the future, we therefore need to win the consumer in the world’s most influential cities. We have identified six global megacities in which we want to over-proportionally invest to grow share of mind, share of market, share of trend: London, Los Angeles, New York, Paris, Shanghai and Tokyo.

    04/06
  • Open Source

    Open Source is a collaboration-based innovation model that aims to build brand advocacy by opening the brands’ doors to the consumer and by inviting him or her to co-create the future of sport and sports culture with us. It is about learning and sharing, about starting conversations between the brand, external experts and consumers, and about giving them the chance to have an impact on what we do. We provide access for externals to tools and resources we use to create, thereby acquiring and nurturing creative capital, and explore new territories so as to create unprecedented brand value for the consumer beyond mere transactional businesses.

    05/06
  • Financial Ambition until 2020

    Creating long-term value for our shareholders drives our overall decision-making process. Therefore, we are focused on rigorously managing those factors under our control, making strategic choices that will drive sustainable revenue and earnings growth and, ultimately, operating cash flow. We are committed to increasing returns to shareholders with above-industry-average share price performance and dividends.

    06/06

STRATEGIC CHOICES

Our strategic business plan has a powerful foundation in our unique corporate culture and is built around three strategic choices that support us in intensifying our focus on our consumers and will drive brand desirability: Speed, Cities, and Open Source.

‘CREATING THE NEW’ ACCELERATION PLAN

In March 2017, we introduced a number of initiatives to foster brand momentum and accelerate top- and bottom-line growth:

FINANCIAL AMBITION UNTIL 2020

Creating long-term value for our shareholders drives our overall decision-making process. Therefore, we are focused on rigorously managing those factors under our control, making strategic choices that will drive sustainable revenue and earnings growth and, ultimately, operating cash flow. We are committed to increasing returns to shareholders with above-industry-average share price performance and dividends. see Internal Management System

Our unique corporate culture and the three strategic choices will continue to be step-changers with regard to brand desirability and brand advocacy. In combination with the initiatives that are part of our acceleration plan, this will enable us to:

  • achieve top-line growth significantly above industry average: We aim to increase currency-neutral revenues annually between 2015 and 2020 at a rate between 10% and 12% on average (initially, in March 2015: high-single-digit currency-neutral increase).
  • win significant market share across key categories and markets: We have defined key categories within the adidas and Reebok brands that will spur our growth going forward. From a market perspective, we have defined clear roles for each of our markets, depending on macroeconomic trends, the competitive environment and our brand strength in the respective markets.
  • improve our profitability sustainably: We plan to substantially improve the company’s profitability, growing our net income from continuing operations by an average of between 22% and 24% per year between 2015 and 2020 (initially, in March 2015: increase of around 15%; updated in March 2017: increase between 20% and 22%).
  • deliver on our commitment to increase shareholder returns: ‘Creating the New’ includes a strong commitment to generating increasing returns for our shareholders. Given our firm confidence in the strength of the company’s financial position and future growth ambitions, we target a consistent dividend payout ratio in a range between 30% and 50% of net income from continuing operations. Our dividend policy is complemented by a multi-year share buyback program announced in March 2018. Under the current program, we plan to buy back own shares for up to € 3 billion in total until May 2021, of which € 1.8 billion was utilized by the end of 2019.

Do you know what Open Source means for us?

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3Cs

The ‘3Cs’ stand for creativity, collaboration and confidence. It is adidas’ goal to develop a culture that cherishes creativity, collaboration and confidence as well as high performance – the behaviors we deem crucial to the successful delivery of our corporate strategy. In fact, our culture and people serve as the foundation and a key enabler of the ‘Creating the New’ strategy.

Leadership Framework

The Leadership Framework is based on the three company behaviors creativity, collaboration, confidence (the ‘3Cs’) and articulates the particular behaviors that are expected of leaders at adidas. The framework was developed jointly with employees worldwide who provided feedback on what great leadership within adidas looks like to them. It provides a global and universal language that is inclusive, reduces the need for local interpretations and outlines concrete behaviors that serve as a measure of leadership effectiveness. It is built into the way we hire and promote as well as rate performance.

Speedfactory

Speedfactory stands for an accelerated manufacturing process of high-performance sports shoes enabled by latest manufacturing technology that was tested at the adidas Speedfactories in Ansbach, Germany, and Atlanta, USA. adidas opened both factories together with Oechsler in 2017. At the end of 2019, adidas started to deploy its Speedfactory technologies to produce athletic footwear at two of its suppliers in Asia. Production at the Ansbach and Atlanta Speedfactories will be discontinued by April 2020. This will enable adidas to continue to respond to short-term trends in demand while using production capacities more flexibly and economically and expanding the range of products with short production times faster. Manufacturing processes will continue to be developed, improved and tested in the adiLab at the adidas production site in Scheinfeld.

Speedfactory

Speedfactory stands for an accelerated manufacturing process of high-performance sports shoes enabled by latest manufacturing technology that was tested at the adidas Speedfactories in Ansbach, Germany, and Atlanta, USA. adidas opened both factories together with Oechsler in 2017. At the end of 2019, adidas started to deploy its Speedfactory technologies to produce athletic footwear at two of its suppliers in Asia. Production at the Ansbach and Atlanta Speedfactories will be discontinued by April 2020. This will enable adidas to continue to respond to short-term trends in demand while using production capacities more flexibly and economically and expanding the range of products with short production times faster. Manufacturing processes will continue to be developed, improved and tested in the adiLab at the adidas production site in Scheinfeld.

Net Promoter Score (NPS)

A survey-based measure of how likely people are to recommend a brand. The survey is based on one single question to consumers: ‘How likely are you to recommend this brand to your friends?’, which can be answered within a scale from 0 to 10. Promoters are consumers giving the brand a 9 or 10 rating, while detractors are those between a 0 and 6 rating. The NPS is the difference between promoters and detractors measured in percentage points.

Parley for the Oceans

Parley for the Oceans is an environmental organization and global collaboration network. Founded in 2012, Parley aims to raise awareness for the beauty and fragility of the oceans, and to inspire and empower diverse groups such as pacesetting companies, brands, organizations, governments, artists, designers, scientists, innovators and environmentalists in the exploration of new ways of creating, thinking and living on our finite, blue planet.

Brand Leadership

adidas’ operating model that aims at providing an organizational structure which enables a ‘consumer-obsessed’ culture that can act with speed, agility and empowerment.

Non-trade Procurement Activities

Non-trade procurement is the sourcing of goods and services which are not linked or indirectly linked to regular trade products sold to customers. The goods and services are classified as consumption by internal stakeholders and include things such as repairing equipment and purchasing office supplies.

Creators Club

Creators Club is a membership program that helps us deepen the relationship with our consumers. Linking all adidas apps, events, communities and channels into one single profile, the program rewards members with points for interacting with the brand, e.g. when making a purchase or using the ‘adidas Running by Runtastic’ or ‘adidas Training by Runtastic’ apps. Depending on the number of points, exclusive benefits are unlocked, including access to hype sneaker and apparel drops or invitations to special events.