This story has been updated.
BERLIN – Managers of German sportswear giant Adidas, which announced its 2023 financial results on Wednesday, announced the company’s new directions for global marketing efforts. The new slogan – “you got this” – will replace Adidas’ previous slogan “nothing is impossible”.
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“There’s a lot of pressure out there, and ‘you just have to do it’ or ‘do something impossible’ is also a form of pressure,” said Adidas CEO Bjorn Gulden. “The attitude of the company should be young and optimistic. “So we think it’s a very positive message because, you know, you all have pressures and challenges,” he said. “But ‘you got this’; if you want.”
Gülden could easily be talking about the company he manages. In 2023, the world’s second largest sportswear company after Nike suffered its first loss in nearly 30 years. Adidas is still working to offset the loss of its highly profitable Yeezy line. His long-running collaboration with musician Kanye West, also known as Ye, ended in late 2022 after West made a series of racist and anti-Semitic statements.
Adidas had previously predicted it would not break even in 2023 but said on Wednesday it performed better than expected last year, although the results disappointed market analysts. The last quarter of the year ended with Adidas’ sales falling by 7.6 percent to 4.81 billion euros. For the whole of 2023, revenues decreased by 4.8 percent to 21.43 billion euros.
Without the Yeezy business, Adidas would have seen its currency-neutral revenues rise 2 percent in 2023, the company said.
The results for both the 4th quarter and the full year, announced by Adidas in its preliminary statement in January, were below market expectations.
“These are not good results,” said Harm Ohlmeyer, Adidas’ chief financial officer. “But the story in 2023 is about great progress.”
In 2023, Adidas’ operating profit also decreased significantly, falling by 59.9 percent from 669 million euros to 268 million euros. However, as Gülden noted, Adidas had initially projected an operating loss of around 700 million euros in 2023. He said the year’s result meant Adidas had actually improved that outlook by around a billion euros.
Adidas noted that some of this is certainly due to selling the remaining Yeezy product, which adds 750 million euros to the company’s sales in 2023. Adidas noted that the last Yeezy products will be sold in 2024 and should bring in revenue of approximately 250 million euros. Gulden said the company has already set aside about 140 million euros for donations to charitable causes to be distributed through its newly established foundation, but this year’s Yeezy sales will be at cost and therefore will not contribute further to the donation pool.
The CEO also silenced rumors that Adidas might work with Ye again; These come after the publication of a photo of Gulden returning from watching the Super Bowl in what Gulden said was a chance meeting with Ye at an airport recently.
Gülden then outlined plans to return Adidas to growth without a bottom line.
The German sportswear giant remains positive about what it can achieve in 2024 as the company celebrates its 75th anniversary, forecasting currency-neutral revenues to grow at a mid-single-digit rate. Gülden said that the first quarter of 2024 is already looking better and things should improve further in the second half of the year.
Market analysts such as UPS and JP Morgan welcomed the news of recovery in the first quarter of this year with cautious optimism.
The plan was for Adidas to achieve double-digit growth by 2026, and Gülden later talked about how it could achieve this; The former Puma boss started working at Adidas at the beginning of 2023.
“Local relevance has become more important than global relevance,” Gulden emphasized. “The era of making a global selection and trying to sell it everywhere is over. I think the mindset of production, creation, sourcing and even marketing should be as close to the consumer as possible. “One way is to work more closely with our retail partners.”
He explained that localization is why Adidas is sourcing more products in China and India and establishing a design office in Los Angeles, as well as working more closely with American retailers.
“The difference between Europe and America is bigger than people think,” Gülden warned. “It is much more economical to work with American retailers on what they want, rather than telling them what they want. [you think] They want it.” He therefore argued that American street culture and design for American sports such as basketball and football should come from Los Angeles rather than Herzogenrath.
In 2023, the North American market continued to be a concern for Adidas. The company announced that sales during the year fell 16.1 percent to 5.22 billion euros, regardless of currency, and the market was particularly affected by the negative impact of Yeezy. North America remains about six to nine months behind other regions, executives said, adding that they hope to see improvement there soon.
Latin America is a much smaller market, but there Adidas recorded growth of 21.6 percent, with sales reaching 2.29 billion euros.
In Adidas’ largest region, its home market of Europe, Middle East and Africa, sales fell 0.4 percent in 2023, regardless of currency. Adidas generated sales of 8.23 billion euros in its home region last year. Things looked better in Greater China and the Asia-Pacific. In the fourth quarter of 2023, the company recorded significant currency-neutral growth of 36.8 percent in Greater China. Some of this was likely due to the ongoing recovery in China following COVID-19 lockdowns in 2022.
For the year, on a currency-neutral basis, Adidas recorded 8.2 percent growth in Greater China and 7 percent in Asia-Pacific. In Greater China, sales reached 3.19 billion euros and in Asia-Pacific 2.25 billion euros. Gulden thinks 2023 could be a “turning point” for Adidas’ China business, with stores more productive and marketing possible again following the previous boycott of Western brands.
In its statement, the company stated that in terms of Adidas product categories, shoe sales increased by 4 percent last year, while clothing sales decreased by 6 percent and were badly affected by high stock levels.
“We started the year with a lot of bad stock, so we spent a lot of time clearing out inventory,” Gulden said. Ohlmeyer added that in the end, the company managed to reduce stock levels by approximately 1.5 billion euros. That means outside the U.S. market, Adidas will start 2024 with “nearly a clean inventory,” executives said.
The company has seen successful sales of products known as terrace shoes, such as the best-selling Gazelle, Handball Spezial and Samba throughout 2023. Next up will be the SL72, the terrace-like running shoe from the 1972 Olympics, and the return of the Superstar, one of Adidas’ best-known shoes. “In 2025 you will start to see collaborations and many activations [the Superstar]Gulden promised.
There will also be new lifestyle running shoes coming. “You’ll start to see some pretty creative and even risky aspects of lifestyle running,” Gulden said. “Not all of them will be successful, but they will drive the brand creatively.”
Low-profile sneakers – that is, shoes with very flat soles – were already a trend seen on catwalks and celebrities, and Adidas had a range of suitable styles to capitalize on, including for motor racing. and martial arts.
Although lifestyle and performance products are often quite different, Adidas plans to incorporate more fashion into the performance sector in the future.
“There are two elements to this,” Gulden told WWD. “If you go to the NBA and watch the players coming in and out of the game, it’s like a fashion show. It wasn’t the same in football. You’ll see what the clubs and federations achieved. [Adidas] “It will become even more fashionable.”
For example, the Real Madrid football team is currently traveling with a special Y3 collection, the product of a collaboration between Adidas and Yohji Yamamoto. Gülden said, “There are no Adidas tracksuits.”
Adidas’ boss said another reason to bring more stylish looks to performance apparel is because it somehow combines the two. “Fashion designers and creators already have a greater influence on the performance range than ever before.”
Gülden predicted that consumers will soon see more fashionable looks never seen before in sports like tennis, track and field and golf, and some sports teams may even begin playing special versions of Adidas’ integrated system. lifestyle collection, Originals.
The famous Adidas three-stripes logo will also begin to appear in a more fluid form; The three-stripe and pointed trefoil will appear alone, without the Adidas name underneath. “The visual language is very clear, very simple,” Gülden said. “To me it looks like a new, modern Adidas.”
“As you can see, we are spending a lot of resources to make the new message visible,” Gülden said. “We put all our energy into putting the brand in front of the retailer and the consumer. This means we are over-investing in marketing and product development. But I believe you need to build momentum at the top line before you start optimizing your cost levels. “Those of you who know me know that I like to grow and then leverage that momentum to build the business,” he said.
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