Adidas to trim portfolio

11 April 2012

HERZOGENAURACH: Adidas, the German sportswear giant, has announced plans to reduce the size of its product portfolio by a quarter to improve overall corporate performance.

Herbert Hainer, the company's chief executive, told Frankfurter Allgemeine Zeitung in an interview that it currently sells 46,897 different lines, many of which do not currently deliver the desired results.

"Twenty percent of our products account for roughly 80% of sales," he revealed. "We need to remove the products where margins and volumes are too small."

"We will reduce our collection by 25%. New ranges for the younger audience, like Neo, will be added, meaning we will need to make greater cutbacks in other areas."

Among the broader schemes being implemented by adidas is tailoring its overall strategy around the occurrence of major sporting occasions such as the FIFA World Cup or Olympic Games.

"We compensate for annual variations by bringing more innovative products to market in years with fewer events," said Hainer.

"This year and in 2014, with the World Cup in Brazil, we will focus on the big events. In between, we are accelerating product and design innovation, and support those heavily with advertising."

It is also taking a more balanced approach to marketing expenditure, independently of whether or not big sporting competitions are taking place.

"This consistency is evident from the fact that we now spend each year about the same share, about 12% to 13% of sales, on advertising and marketing."

"This previously varied considerably, and thus exerted a stronger influence on profits. And in the past ten years, sales growth has been steady."

Other core objectives for adidas include driving up ecommerce sales, further reducing any reliance on discounting and making the in-store experience more interactive, Hainer said.

Data sourced from Frankfurter Allgemeine Zeitung; additional content by Warc staff