After Kanye, will Adidas have a golden age?


Adidas AG confirmed on Tuesday that Bjorn Gulden, the outgoing CEO of rival Puma SE, will succeed Kasper Rorsted as head of the sportswear giant. His first task: fill the €1.8 billion ($1.8 billion) hole left by the end of Adidas’ longtime partnership with disgraced musician Kanye West. That’s what RBC revenue analysts estimate its Yeezy label generated for Adidas in 2021, accounting for 45% of the company’s net profit.

Adidas pointed out that it is the sole owner of all Yeezy designs. This leaves the door open to bring the shoes back in another form. But Yeezy without Ye seems problematic for two reasons.

First, some consumers may see the continuity of styles — even without the Yeezy name — as not going far enough to distance Adidas from its former collaborator. Further negative reactions could put increased financial pressure on the company. On the other hand, those still loyal to Ye may not purchase the revived designs as they are no longer associated with the star.

Gulden, however, has a track record that could help Adidas find a way forward. He has rejuvenated Puma since his arrival in July 2013: sales have more than doubled over the period to reach 6.8 billion euros in 2021. He increased the operating margin to 8.2% last year, against 2 .1% in 2013. Puma shares have outperformed Adidas by about 62% on a total return basis in the nine years since Gulden signed.

Puma, formerly controlled by Gucci owner Kering SA, has remained a fashion-forward sportswear company. Unlike Adidas, it was quick to capitalize on Gen Z’s desire for retro 1990s styles, from chunky sneakers to logo sweatpants and shoulder bags. Rihanna launched her Fenty line with Puma in 2016. She also unveiled a three-way collaboration with fashion house Balmain and supermodel actress Cara Delevingne in late 2019. Earlier this year, Puma launched a yoga collection with her respectful of the environment.

While Adidas has made strides in recent years in football and running, it has fallen behind in more fashion-focused areas. The loss of Yeezy only amplifies this failure.

Gulden could help reinvigorate that part of the business, especially in shoes. On the one hand, it could more effectively exploit the Adidas archives. Womenswear is another opportunity for him: it accounts for only about a quarter of sales at Adidas and rival Nike Inc, compared to 50-60% in the traditional footwear and apparel market, according to Redburn analysts. Here, Adidas has a connection with Beyonce’s Ivy Park, which has yet to reach its potential.

That’s not to say that Gulden, a former professional football and handball player, can’t make performance sportswear and apparel either. In fact, he built that side of Puma’s business. He recruited Beyonce’s husband, Jay-Z, as the creative director of Puma’s basketball operations. And he doesn’t come to Adidas as a foreigner: he worked for the company for seven years in the 1990s.

Since Adidas first announced it was in talks with Gulden on Nov. 4, its shares have jumped about a quarter. Reopening hopes in China also helped push the stock higher.

There remains the question of scale. Adidas’ sales are almost three times greater than Puma’s, which makes its recovery more difficult. And changes to Adidas’ product line, especially sneakers, won’t happen overnight.

However, Adidas must learn to live without Ye. Investors hope the new CEO can transform the company as he revitalized Puma.

More from Bloomberg Opinion:

The Adidas-Kanye divorce will be expensive: Andrea Felsted

Liverpool’s sale highlights football’s financial fickleness: Alex Webb

• Red Bull billionaire’s secret recipe for success: Chris Bryant

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.

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