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November 9, 2018

Adidas to continue “heavy” investment in digital

Adidas says it will continue to invest very heavily into its digital business model as the German sportswear giant looks to boost product innovation and speed-to-market.

Adidas says it will continue to invest very heavily into its digital business model as the German sportswear giant looks to boost product innovation and speed-to-market.

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Speaking on the firm’s earnings call following the release of its third-quarter results this week, CEO Kasper Rorsted told analysts that when it comes to digital, he believes there are still many things Adidas can do.

The company has been something of a pioneer in digital innovation, near-shoring using automation and robotics, and looking at IoT from a customer and store point of view.

“We have been and will continue to invest very, very heavily into the overall set of our digital business model,” says Rorsted. “We are heavily investing in people and can make use of data much more diligently. We are applying dynamic pricing. We are investing in physical infrastructure to ensure we speed up delivery. It’s a combination of products, Hype launches surrounding digital tools like the app, like the Creators Club and just continuing to invest to make the app consistent.”

The Creators Club is a global membership programme that rewards consumers’ loyalty with access to a set of specials, including exclusive product offers and events. Consumers in the US are the first who can sign up for the programme in stores and through the Adidas app.

“It makes a huge difference that we drive our business and our consumer engagement through the digital channels,” Rorsted told analysts. “Some quarters will be great, some quarters will be slower but overall, we’re convinced that the digital journey is the right one for the company.”

CFO Harm Ohlmeyer concurred. Especially in the US, he said Adidas is continuing to invest to reach the consumer faster through digital, through e-commerce, and by investing in building the appropriate infrastructure. “We have the financial strengths to do so and [are] accelerating these things.”

He added: “We used to run this company like 20 small companies. We want to run it as one company. And we are accelerating our ERP roll-out. We’re also standardising some of the business processes, primarily in Asia. And we put all hands on deck for Asia to accelerate as much of these things into 2018 to then get more scale in the years to come.”

Adidas increased its full-year earnings outlook on Wednesday (7 November) as a result of strong growth in its third-quarter. Net income from continuing operations jumped 19% to EUR656m (US$863m), while sales climbed 3% to EUR5.9bn.

Combined sales of the Adidas and Reebok brands continued to expand at strong double-digit rates in both North America (+16%) and Asia-Pacific (+15%), but declined 1% in Western Europe in the quarter.

Speaking to CNBC following the release of the results, Rorsted said: “Some of our launches in Western Europe have not worked to the extent that we wanted, and there is no doubt that the European economy has been more impacted (by events) than any other in the world. The Brexit decision is perhaps the most unwise we’ve seen in the past thirty years and that is also affecting consumer spending in Europe.”

Related Companies

Free Whitepaper
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Internet’s Next Revolution: Can Web 3.0 Unlock Decentralized and Intelligent Internet?

Big tech companies have created massive ecosystems that offer the internet’s key services, making it impossible for users to break from their “walled garden” and ultimately surrender control of their data. A sharp rise in public awareness about data privacy and the value of their data has stimulated new awareness around web 3.0 networks. Web 3.0 is the third iteration of the internet, designed by token-based economics to wrest the control of user data from big tech companies and provide a user-centric internet. It creates a mesh of peer-to-peer communication and decentralized governance structures to enable individuals and organizations to tackle data privacy and censorship threats. Reasons to read: An increasing number of startups and tech players are shifting gears to create blockchain-powered decentralized ecosystems for different sector-specific applications and services. Against this backdrop, businesses need more awareness of the fast-paced fundamental restructuring of the internet. The report highlights the current state of play and the future potential of web 3.0 networks in driving decentralized and user-controlled internet. This is anticipated to unlock new possibilities for enterprises across sectors such as financial services, gaming, sports, media & entertainment, retail, and technology, among others. Read our report and gather insights on the following topics:
  • Evolution of the internet
  • Active players in the web 3.0 ecosystem
  • Key applications by major sectors
  • Driver and challenges
  • Top startups and Mergers & Acquisitions
  • Regulatory landscape & future scope
by GlobalData
Enter your details here to receive your free Whitepaper.

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