The sweatpants have become the most popular item of clothing in the pandemic. With the not only pandemic-driven megatrend towards the comfortable leisure look, Adidas wants to earn billions in the next few years. The Franconian sporting goods manufacturer has now announced this in an ambitious growth strategy. In the next five years from 2021 to 2025, profits should increase by 16 to 18 percent, announced CEO Kasper Rorsted on Wednesday at the presentation of the medium-term corporate goals. In terms of sales, growth of 8 to 10 percent per year is targeted over the same period. In order to maintain its position against world market leader Nike and other competitors, Adidas has created its own slogan as a motto for the next few years: “Own The Game” (German: “Determine the game”). In the future, however, the manufacturer wants to continue to gain market share, said Rorsted in a conference call on Wednesday afternoon.
At the same time, Adidas published its figures for the fourth quarter of 2020. Apparently, the company was able to recover from the Corona crisis towards the end of the year. And that despite the fact that half of all European stores were closed. The traditional company concentrated more on the online business. With success: sales in online retail rose by a full 43 percent in the last three months. Over the whole year, the increase in this area was as much as 53 percent. Discount campaigns such as Cyber Week also contributed to this growth.
Things are clearly going downhill in Europe
In this way, the group was able to largely offset the consequences of the corona restrictions. The bottom line is a currency-adjusted overall growth of one percent compared to the same period last year. In view of the ongoing negative currency effects, however, total sales fell by five percent to 5.548 million euros. In 2019 it was 5.935 million euros.
Despite the pandemic, Adidas recorded slight growth on almost all continents in the fourth quarter. Business in North America grew by two percent, while Asia grew by one percent. The company in the Far East benefited in particular from the noticeable economic recovery in China. In the Middle Kingdom, sales rose by seven percentage points. In the future, China will be the largest growth market. Only the European market continued to suffer. Compared to the same period in the previous year, it was six percent downhill. Adidas cites the branches closed due to the corona measures as the main reason for this.
Focus on sustainability and women as a target group
Adidas wants to pay special attention to the topic of sustainability. Nine out of ten items should be sustainable in terms of material and production over the next five years, said Rorsted. The products should either be made from recycled materials or processed in a circular economy. Or they should contain regenerative materials. This should apply to 60 percent of the products in 2021. In 2024, the company plans to use only recycled polyester in its products. Two years ago, Adidas introduced a sports shoe that was made entirely from plastic waste fished from the sea.
In addition, the group wants to concentrate more strongly than before on the core target groups – soccer, running, training, outdoor and sporty casual wear. Rorsted believes that 95 percent of future sales growth could come from these buyers. In addition, women should be emphasized more as a target group.
The Franks want to invest more in their brand, but above all in digitization. One billion euros is expected to flow into improving online business by 2025.
Adidas looks to 2021 with confidence
Since around 95 percent of the international Adidas stores are currently open, the group expects sales to increase by around 14 to 19 percent this year, as well as a recovery in the gross margin to around 52 percent. The operating margin is expected to be between nine and ten percent. In addition, a profit is expected, which should be between 1.25 and 1.45 billion euros. The profits generated with Reebok are not included, as the American subsidiary brand is to be sold this year.