Brands key to Adidas growth

10 November 2010

HERZOGENAURACH: Adidas, the sportswear giant, is aiming to substantially increase its sales over the next five years, basing its approach on the concept that "brand success means business success."

In its Route 2015 plan, the organisation outlined the goal of boosting revenues by between 45% and 50% by 2015, when returns should come in at €17bn.

"Brand success means business success," said Herbert Hainer, ceo of Adidas. "That's why we have set out clear business targets based on our strong and unmatched brand portfolio."

"Over the next few years, we will invest in our brands in order to reach our ambitious, but realistic targets."

The company's Sport Performance division, delivering innovative and technologically advanced products, is anticipated to see revenues climb from €6.2bn to €8.5bn.

Its Sport Style arm is prioritising the "lifestyle and fashion consumer" in a bid to lift sales from €2bn to €3.7bn, figures standing at €1.9bn and €3bn respectively for Rebook, positioned as a fitness and casual sports range.

"We want to achieve qualitative and sustainable growth by building desirable, leading brands in consumers' and customers' perception," said Hainer.

Customisation, interactivity and e-commerce, all dependent on new media, will also be central to the firm's strategy.

Key regions for Adidas include China, Russia and the CIS, India, Latin America, the UK, India and North America.

Around 50% of incremental sales could be drawn from the US, China and Russia alone, according to Hainer's forecasts.

More specifically, China should generate double-digit annual expansions over the coming five years, with Adidas hoping to open 2,500 stores in the country by 2015.

The 16m students at American high schools are another core demographic, as Adidas attempts to gain ground in Nike's home market.

"In the US we definitely have the biggest potential," said Hainer. "We want to win the hearts and minds of high school kids."

The German operator is seeking to further the momentum that followed the introduction of a turnaround programme in 2001, which has resulted in revenues doubling to more than €11bn.

Hainer said: "We have fundamentally redefined the competitive landscape of our industry and have now created what is universally acknowledged as a global two-horse race.

"We are now well prepared to enter our next growth phase based on our mission to be the leading sporting goods company in the world."

He added: "Our aspirations are to outperform total market growth ... to outgrow our major competitor and have the bottom line grow faster than the top line."

Acquisitions may also make a vital contribution in attaining such an objective, Hainer stated.

"It stands to reason that the Adidas group will continue in its role as 'Consolidator-in-Chief', taking market share through organic growth or exploring other business opportunities if they align with the strategic brand priorities," he said.

Data sourced from Adidas/Financial Times/Reuters; additional content by Warc staff