GERMANY: Adidas defends position despite investor unrest
Adidas insists it is in “constructive and ongoing dialogue” with investors
Adidas has moved to defend its position over reports the sporting goods giant has received pressure from investors to accelerate a turnaround and consider replacing its chief executive.
Adidas last month cut its full-year gross margin target just a week after lowering its earnings forecast.
The guidance came after the group revealed plans to close stores in Russia and restructure its TaylorMade golf unit in a bid to drive growth and profitability.
The Wall Street Journal reported at the weekend that investors are putting pressure on Adidas to accelerate a turnaround, and even discussed with executives the possible removal of the company's longtime chief executive, Herbert Hainer.
Large shareholders are understood to have criticised the performance of Hainer, arguing that he should have reacted faster to the decline in US sales at its TaylorMade golf brand, people present at the meetings told the publication.
A spokesperson for Adidas said that "constructive and ongoing dialogue" with investors is very important for the company. "That's why we regularly meet with current and potential investors."
The reports come just six months after Adidas extended the contact of Hainer by two years until 2017.
"We are convinced that Herbert Hainer will continue to drive the company's success on its growth path," Igor Landau, chairman of Adidas's supervisory board said in March.
The declines, however, have mainly been due to lower margins in the retail segment and at TaylorMade-Adidas Golf, in addition to higher input costs and negative effects from less favourable hedging rates and foreign currency devaluation.
Speaking on the firm's earnings call last month, Hainer said it will begin a restructuring programme at TaylorMade-Adidas Golf to align the organisation's overhead to match lower expectations for the golf industry's development.
This is expected to impact second-half operating profit by EUR50m to EUR60m.
"As the dominant market leader, we take this initiative now to secure our lead, and to be the first mover in reinvigorating the market. Our innovation pipeline is full and we are set to go, whenever we feel the market is ready," he told analysts.
Investors have also have urged Adidas to speed a turnaround at Reebok, which Adidas bought in 2006 for around EUR3bn, sources told the WSJ.
A spokesperson for Adidas, however, told just-style that over the last couple of years, the company has "successfully positioned Reebok as the fitness brand".
She added: "As a result, Reebok sales have grown for the last five consecutive quarters. In 2013, gross margin for Reebok increased by 4 percentage points to 39.7% - which was very close already to our initial 2015 goal of a Reebok gross margin of more than 40%."
Adidas isn't alone in experiencing struggles in the golf industry. Dick's Sporting Goods last month laid off hundreds of employees in its golf division amid weakening demand and a continued significant decline.
US retailer Dick's Sporting Goods is to open a boutique women's fitness and lifestyle speciality chain....
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