Annual Report 2022


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To our Shareholders

Interview with
our CEO

Hello Bjørn, and welcome to the three stripes. Or should we rather say: ‘welcome back’ to the three stripes?

Well, you can say both. It’s a ‘welcome’ and of course it’s a ‘welcome back’ and I appreciate both. It’s like coming home to the brand I have always had strong feelings for. My father was an adidas player and I played sports in adidas all the time when I was a kid. And of course, it was my first job. I followed adidas even when I was working in different parts of the industry, so being allowed to come back is a great honor.

How did it feel coming to the office as adidas CEO at the beginning of the year?

Walking into the building gave me a very positive feeling. Of course, I’m aware that things are not great and that the expectation is on us that we will improve. And I can sense that hope.

You’ve been an athlete almost your entire life and now you’re the CEO of adidas. How has sport shaped your life and your leadership style?

Well, sport is my life. Because my father was a professional athlete, I did all kinds of sports when I was a kid – from skiing and track and field to handball and football. I went on to play football and handball professionally, but unfortunately, an injury ended my career early. My wife was a national champion in gymnastics, and my sons played football at a high level. I spend almost 100% of my time with things that are related to sports.

I have a bachelor’s degree and I have a master’s, but the one thing that has taught me the most about leadership is playing team sports. You play with people you like, with people you don’t like, or who are better than you, worse than you, and you must find a spot where you can have the biggest influence on the team. I’ve learned a lot from sport and I’m still learning a lot.

You describe yourself as a ‘sports romantic.’ What do you mean by that?

I think all sports are important. There’s a tendency to focus on the big ones like football, basketball and running, but smaller sports are just as interesting. I always felt that Adi Dassler was also a sports romantic, trying to deliver the best equipment for all sports. And I have the same philosophy. Visibility across many sports brings a lot of worth because that will give us credibility. That’s why I’m a sports romantic. I love all sports.

You mentioned team sports earlier. How do you build a winning team?

Well, it’s difficult to say how I build a winning team because the word ‘I’ is a little bit misleading. I think we build winning teams by showing respect for each other, playing to each other’s individual strengths and trying to make our colleagues better. That’s the best formula. When you look at the Football World Cup, the best team on paper doesn’t always win. Often, the team that comes together and acts like a team wins.

Of course, you need a coach, and you need captains. In the end, we need to remember that a bad coach can make a good team bad, but a great coach alone can’t make a bad team good. All the players need to play their roles and make their teammates better, not only themselves. Those are the teams that will win in the future.

Then there’s the culture of the company. We’re operating in so many different markets that we are dependent on a truly multicultural team. I also think our workplace should be the most fun place to be. We should laugh a lot and we should not take ourselves too seriously. We should be allowed to be different, and we need to show each other respect. It doesn’t matter who you are or what job you have, we are all adidas. With this comes the team spirit that we will need to win.

Now let’s shift gears and talk about the business. What’s your view on the current state of affairs?

You look at the numbers and it’s obvious that we’re not performing the way we should. I have said it many times, but we have all the ingredients to win: We have a great brand, we have credibility, we have authenticity, we have innovation, we have collaborations, we have very talented people, and we have a global network.

But covid-19 brought problems for adidas that maybe weren’t addressed as pragmatically as they should have been. Now we are locked into a strategy that isn’t really tied to how the world has changed – with the pandemic and everything that came after.

Now we should please our multi-brand retail partners and their consumers. They need to see strong income, but we also need strong direct-to-consumer sales for ourselves. We have to deal with all these channels in an optimized way and with more discipline in how we go to market.

We know 2022 was a difficult year and 2023 won’t be much easier. Our entire industry has suffered from high inventory levels and, as a result, there is a lot of discounting going on in the marketplace.

But we do have some winners, especially in the performance area. We have a very good football business with great new concepts and products, and we’ve made huge progress in running, which is maybe the most difficult area to qualify in. I love to see that we’ve established ourselves in the outdoor industry, our golf business is doing well, and we have some exciting things coming up in basketball.

On the lifestyle side, we have collaborations with Gucci, Prada, Moncler, and more. I think when people say we’re not exciting, maybe sometimes we are too exciting and don’t celebrate the individual wins because we have so many. I’m sure that if we get some time, we can – and will – turn this into a very successful formula. Again, we just need to work a little bit more on the basics.

What does adidas need to focus on to get back on track?

We need to focus on the core of our business, which is design, development, sourcing, marketing, selling, and delivering product. We should never forget that we are a shoe, apparel, and accessories brand that sells physical product. Everything around that should support this, so right now, that means focusing on the product, on how we go-to-market and being the most service-minded organization both to our retail partners and the consumer.

We should be the most liked brand by both athletes and by those who are influential in our business. We need to create the best product and must always remember that our consumers – although informed globally – still think and act locally.

What’s your view on the importance of our markets?

During covid-19, markets drifted away from each other. China was open and closed at the same time, the US was open, but Europe was closed – that meant that the launch of products and the flow of our industry switched from being very global to very local. The political tensions and economic chaos of the last three years have also fed into this.

The needs in China might be different to those in Germany or in North America. This local focus of giving the consumer what they want has to be top of mind. You cannot tell the consumer what they want. We need to listen to what our consumers want from us. Yes, they are influenced by global athletes, global celebrities, and global products, but we also need to accept that there are local influences. We need to find that balance.

We can also optimize our go-to-market processes. Speed has become more important, and we need to be more agile. Things change quickly, and we need to move with this change to stay relevant in the eyes of our consumer.

Do you want to focus on specific markets?

They will be treated equally, yet individually. I think it’s wrong to set priorities and say that one market is more important than the other, we should be strong in every market and tailor our approach for each individual one.

Saying that, as our home market, we should be market leader in Europe. We also know that if you’re not successful in North America, you’re not really a global brand. China has been a growth driver for us. Because of the pandemic and other challenges, however, we’re not where we used to be, but I have a feeling that things will improve there. Latin America is on fire, which makes me optimistic. And then, there are markets like Korea and Japan which are very directional and very fashion oriented. Here we have a real opportunity to grow.

So, to win in every market, we need to work more closely with our accounts to find out what works and what doesn’t. If you have a good product and the retailer wants it, our consumers will probably buy it. If the retailer doesn’t want it, then it’s likely the consumer doesn’t want it either.

We have both physical stores and e-com sites, so we can always bring whatever we want to market and test it. We’re already sitting on a lot of consumer insights which could definitely help us win in the markets.

Talking about insights and trends, what trends in the industry do you see right now?

There are so many mega trends that are good for us as a company, but the one that I’ve liked most is that, during covid-19, people have been coming back to sports. They’re becoming more health conscious and embracing individual sports – especially in the outdoors – like walking, running, biking, and skiing. There’s also growth in yoga, pilates and a variety of other sports, and that’s very good for us!

The workplace is becoming more casual, and people are wearing sneakers and branded sweatshirts to work. It’s clear that working from home has led people to become more casual in every aspect of their lives.

Last year also saw the Samba and the Gazelle become that special look everyone wanted. This is something that we own and it’s very, very hot. It has happened organically over the last six to nine months and it’s a trend that we’re really exploiting.

adidas has always had a strong focus on sustainability. How important is this topic to you?

For me, sustainability is a focus all companies must have. Doing things that are good for the next generation – for the planet – is a value that we should all have. This industry – and especially adidas – has done a lot of good stuff for the planet over the last 30 years. Back then, we didn’t think about it at all and look where we are now.

Our company has set very clear targets on what we want to achieve, and we will do exactly that. Sustainability is going to be one of the things that every employee – especially those working on product – needs to know about. It’s not something we can delegate to just one department, I believe that everybody in the company needs to have knowledge in this.

What are you most looking forward to in 2023?

Well, I look forward to the big sporting events including the FIFA World Cup 2023 in Australia and New Zealand. On the business side, I’m looking forward to making progress on our turnaround and showing our people that we can make a positive shift. Although we have problems in the short term, we can get back to where we belong.

Do you have any final message for our shareholders?

adidas is a company like no other. There’s probably no other brand in the world that is as emotional as adidas. We are relevant in sport, in music, in entertainment, and in fashion. Our appeal is global and stretches over multiple generations. And when I look to the future, I see people doing more sport, dressing more casually and being even more brand-driven. Given all this, I think we’re a great company to invest in.

Under the ‘Lifestyle’ category, we subsume all footwear, apparel, and ‘accessories and gear’ products that are born from sport and worn for style. ‘adidas Originals,’ which is inspired by sport and worn on the street, is at the heart of the ‘Lifestyle’ category.