On the heels of news that Adidas's North American business is in "shambles" and that the German sportswear giant is at the center of a massive trade secret misappropriation lawsuit involving rival Nike, the board of Adidas has launched a formal search for a successor to Chief Executive Herbert Hainer, who has faced criticism as the sportswear company has lost major ground to U.S. rival Nike. Hainer, 60, who joined Adidas in 1987 and rose rapidly through the ranks to take over as CEO in 2001, wrote to staff confirming the impending C-level change. Last year, Hainer's contract was extended until 2017 with a mandate to work on a succession plan; he said the search for a new CEO is a "long-term process" that will involve both internal and external candidates. He is due to launch a new long-term strategic plan on March 26 in conjunction with his two most likely successors, global brand chief Eric Liedtke and sales boss Roland Auschel. Hainer said he wants to get the plan off to a "great start," without saying if he will see out his existing contract.
Manager Magazin recently reported that Hainer would target 20 billion euros ($22.7 billion) of annual sales and an operating margin of at least 10 percent by 2020, up from 14.8 billion and 8.3 percent last year respectively. Nike is targeting revenue of $36 billion by fiscal 2017. Hainer said the plan will show the ambition of Adidas to be the best sports company in the world, without giving any additional details. He said Adidas had made a "fantastic start" to 2015 after he restructured the struggling golf business, sold the non-core Rockport brand and launched a big marketing drive, including campaigns with musicians Pharrell Williams and Kanye West.
Sales have more than doubled during his 14-year tenure, but those of Nike and other rivals have grown even faster as Adidas failed to crack the U.S. market despite buying the Reebok brand in 2006. It recently slipped into third place in the United States behind Nike and relative newcomer Under Armour. Hainer's woes were compounded last year by a sudden slowdown in the golf market and the firm's deep exposure to Russia, where the tumbling rouble has scaled back new store openings. A series of profit warnings prompted rumblings from shareholders, with hedge funds reported to be considering buying stakes in Adidas to force Hainer out.
Further attempts by Adidas to get ahold of the U.S. market include the appointment of Mark King as president of the company’s North America business. King officially took over the reins in June 2014, an appointment that Adidas has touted as a display of its commitment to the North America marketplace. Turning around the U.S. business is “the top priority” for Adidas, according to recent statements from the company’s leadership. More to come …