Adidas AG, the battered German sportswear icon is betting that an executive steeped in computers and laundry detergent has the capability of bringing it about and making it cool once again in the US market. The company made the announcement that current chief executive of Henkel AG, a German manufacturer of adhesives, cleaning products and beauty-care items, would become a board member of the sportswear in August. Mr. Kasper Rorsted will be taking up the position of CEO at Adidas in October. His resignation had been announced earlier in the day by Henkel Ag. The current CEO of Adidas, Herbert Hainer will exit the company at the end of September.
This is six months before his contract came to an end. The firm’s stock rose due to the CEO change announcement and it closed 6.3% higher after it had risen more than 11% during the trading session on Monday. Investors are hoping that Mr. Rorsted can assist with restoring growth of the sportswear firm. He has been leading Henkel for the past eight years and has managed to triple its share price. One of the top shareholders of the company, Union Investment fund, which has a 1.2% stake in Adidas expressed their appreciation of the opinion.
Its manager, Ingo Speich said that they hoped Mr. Rorsted would be able to put an end to the dry spell of the company’s profitability and welcomed him aboard. The 61-year old Mr. Hainer is the longest-serving CEO of a blue-chip company in German. During the course of his 14-year tenure, he posted new profits records until 2012 and went from being a respected and lauded executive to being the subject of investors’ criticism. Adidas’s financial targets were scrapped by Mr. Hainer in 2014, which led to a decline in share price by nearly 40%. Since then, the company’s share price has made a recovery.
The declining market share in North America, the dwindling sales of the firm’s golf business and the currency losses in one of the most important markets of the company i.e. Russia were the reasons behind the weak financial performance. A number of investors expressed their displeasure at the company’s performance in late 2014 and had pushed for the early departure of Mr. Hainer. However, the CEO didn’t budge and insisted that he would finish his contract and work on turning the company around. He had presented a new five-year strategy last year in March, which included greater focus on the US market where Adidas has been struggling for years and some management changes as well.
Under his leadership, the company lost plenty of ground to its rival in North American, Nike Inc. and some share was also taken away by newbie Under Armour Inc. In the sporting-goods market in the US, the number 3 spot is currently held by Adidas. Last month, the CEO had said that the turnaround was going well for the firm. He added that the investors were satisfied with the progress and he expected 2016 to be a great year for the firm.