BLOOMBERG – Bjorn Gulden’s warning that the Yeezy shoe debacle could lead to a EUR700 million loss at Adidas AG won’t have come as a total surprise to investors familiar with the Chief Executive Officer’s (CEO) track record as a turnaround artist at other struggling companies.
When he took the reins of Pandora A/S a decade ago, he was quick to stress how many challenges the Danish jewellery maker confronted.
Two years later, as incoming CEO of Puma SE, he said the turnaround wouldn’t be a “quick fix” as the German sports brand was “on its knees” with retailers trying to win back shelf space from rivals.
Last week, Gulden delivered probably the gloomiest welcome message of his career, saying that Adidas – where the Norwegian took over as CEO in January – may be headed for its first annual loss in more than 30 years.
“We are currently not performing the way we should,” Gulden said. “I am convinced that over time we will make Adidas shine again. But we need some time.”
Gulden’s salvo came as a reality check to traders who had pushed up Adidas shares 66 per cent since it became clear he would take over as CEO back in November.
Sales will probably sink at a high-single-digit rate in 2023, and the company has a EUR1.2 billion pile of unsold Yeezy merchandise, Adidas said.
Investors were bracing for a cautious outlook from Gulden, but nothing of that magnitude.
The shares plunged as much as 13 per cent on Friday as investors took stock of the long road ahead. But for some longtime watchers of Gulden, there was a silver lining in the message.
It was vintage Gulden, setting expectations extremely low to give him time to eventually start ticking off steady victories, according to Fund Manager at Union Investment in Frankfurt Thomas Joekel, one of the top Adidas shareholders.
“With this action, Gulden gives the staff of Adidas all the time in 2023 to re-organise, refocus, to be creative and then to perform much better in the years to come,” Joekel said.
Adidas has plenty of challenges. It’s struggling to win back customers in China, once its biggest growth market, where consumers are quickly becoming loyal buyers of Chinese brands.
