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Adidas Marketing

Adidas CEO credits turnaround to handing brand managers more power and responsibility

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By Tony Connelly, Sports Marketing Reporter

August 31, 2016 | 3 min read

Adidas chief executive, Herbert Hainer, has credited the company’s brand managers with helping to turn around the alarming profit warnings of two years ago and its return as a serious challenger to rival Nike.

Herbert Hainer

Herbert Hainer

The 62 year-old recently spoke to the WSJ to discuss his 15 year career with Adidas, which will come to a close next month when hands over the chief executive role to Kasper Rorsted who joins from Henkel AG.

Hainer is set to go out on a high with the German brand forecasting net profit to rise by around 40 per cent on last year.

His curtain call comes during a far more positive period for the brand compared to just two years ago. Shortly after its sponsorship of the 2014 World Cup, Adidas issued a string of profit warnings and slashed its five year targets. The changes spooked investors and the German brand subsequently saw its share price fall by almost 40 per cent.

The economic crisis in Russia, its third biggest market behind the US and China, and its failing golf business significantly contributed to the downturn which led to calls for Hainer to step down.

Hainer held on however and in an attempt to turn things around he adopted a new strategy hinged on the ingenuity of Adidas’ brand managers.

When asked about the key to the brand’s remarkable turnaround Hainer responded: “We gave much more power and responsibility to our brand managers. We made them responsible, from design and development to end products. And we made them responsible for the whole supply chain. In the past, we used to be a little more, say, feudalistic, in our organization.”

It’s a strategy which led Adidas to focus more on influencers such as Kanye West, a partnership which Hainer readily admitted “definitely helped us, no doubt”.

“He was here day and night and worked with the design team. Sometimes he drove the designers crazy, but this also gave our people inspiration.”

Adidas is now in a far healthier position than it was two years ago. The brand has lifted its earnings guidance four times since April this year and has forecasted net profit to rise by almost 40 per cent over last year.

Building on this, Adidas is now strengthening its position by working with key influencers and using its newsrooms to produce its story on a weekly basis rather than putting out a few big ad campaigns each year. By doing this the company is ensuring that it becomes part of the cultural shifts and is more readily ablle to tap into cultural shifts.

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