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Adidas The Underdog's Three-Stripe Comeback Plan

Adidas CEO Herbert Hainer
Adidas CEO Herbert Hainer
Uwe Ritzer

NUREMBERGSoccer isn't everything. At least not in the sports equipment business. Adidas is learning that the hard way. The brand with the familiar three-stripe logo used the World Cup in Brazil to its advantage far better than global leader Nike but the hoopla died when the games ended.

Adidas is in big trouble, primarily because of the weak market for golf equipment and flucuations in exchange rates. The company has been forced to retreat from previously announced goals, and the stock has taken a corresponding nosedive. Meanwhile, the gap with Nike widens as the American company springs ahead.

"I'm a striker, and I want to win," Adidas CEO Herbert Hainer recently said defiantly when he presented his plan to steer the company out of its rut. The 60-year-old hobby soccer player said the company would have to fight hard to win back trust lost with the financial markets, investors and the public.

The Americans may be No. 2 to Adidas in soccer equipment sales, but in all other product categories and many regions, they surpass Adidas. They’re also growing significantly stronger — even on Adidas' home turf of Germany. The gap is largest in North America, the most important market for the sports equipment industry. There, Adidas is slumping despite the fact that it is the exclusive sponsor of the NBA, one of the most important U.S. sports leagues.

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Losing ground? — Photo: Zac Allan

Adidas hasn't been helped by its 2006 decision to narrow the gap with Nike by spending billions to buy the U.S. brand Reebok. Since the takeover, Reebok has been a problem child for Adidas.

It’s not as if business for the Adidas and Reebok brands is terrible. Allowing for exchange rate fluctuations, they showed increases of 14% and 9%, respectively, in the second quarter. Adidas shirts and shoes are strong sellers in Western Europe and do exceptionally well in South America.

Investors demand better performance

But investors are not impressed. The global problems appear to them to be too great, and management lost a lot of credibility by issuing three profit warnings within the space of a year. The Adidas stock price sank to 55.5 euros per share Aug. 7, its lowest in two years. At the beginning of the year, its stock price was down by a third, more than any other stock in the German DAX index. So something has to happen fast.

Hainer, who's been CEO since 2001, believes the way out involves a mix of investment, savings and reorganization. He has announced more stringent organizational structures in marketing and sales. The jobs of those working with the TaylorMade golf brand, which has lost over a fourth of its business in the first half of the year, are on the line, although just how many will be lost is still unclear.

In view of the uncertain ruble and the Ukraine crisis, Adidas will open only 80 of the previously planned 150 shops in Russia and the Commonwealth of Independent States countries this year and next. The prices for shoes and jerseys have already been lowered in those markets.

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Adidas store in Moscow, the biggest in Russia — Photo: Lite/GFDL

The sports equipment manufacturer wants to invest primarily in marketing. Its efforts during the 2014 World Cup demonstrated how successful Adidas can be when it engages in intense, direct communication with its customer base, Hainer said. So the advertising budget is being increased. Hainer called the 1.8 billion euros that will be funneled into advertising and marketing next year "the most ambitious marketing campaign of all time."

Still, a number of recent company predictions aren't quite panning out. For example, 2014 profits are expected to be a fifth less than anticipated. Other key figures such as operating margins were less than projected as well, and figures for the second half of the year aren’t expected to be much better. The cost of restructuring TaylorMade alone will reduce profits by 50 to 60 million euros.

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Gluten-Free In France: Stepping Out Of The Shadows, Heading Upmarket

For those in the haute cuisine world of French food, a no-gluten diet (whether by choice or health requirements) has long been a virtual source of shame. But bakers, chefs and pastry makers are now taking the diet to whole new levels of taste and variety.

photo of a man carrying bread in a field

Paris-based entrepreneur Adriano Farano, in Sicily, where his company's wheat is grown

Adriano Farano's Instagram page
David Barroux

PARIS — The "gluten-free" aren’t hiding anymore.

Whether they avoid the grain protein by choice or by obligation — due to taste, allergies or an intolerance — many stick to a diet seen by the outside world as a little bit funny, or perhaps simply just bland.

For some, being gluten-free even came with some amount of self-consciousness: about being that person, the one who announced at the beginning of dinner that they wouldn’t be eating that bread, or that pasta, or that pastry — or about coming across as precious and complicated, or worse, as a killjoy for everyone else’s gustatory pleasure.

For those who feel that it is hard to speak up, it's often easier just to keep the gluten intolerance to themselves and eat only the vegetables at meals, abstaining from bread and dessert to avoid stomach cramps.

But the times, they are a-changin'. Living without gluten used to feel punitive; now it feels more like an option. The number of gluten-free products has exploded, in both quantity and quality, and there’s never been a better time to join the "no-glu" camp.

In supermarkets, bakeries and restaurants, there are increasingly varied alternatives to gluten. And demand is just as high — €1 billion per year in sales in France alone, according to Nielsen. The research consultancy found that 3% of French households were gluten-free in 2019. Now, that number is 4.4%, which is twice as high as the number of “strictly vegetarian” households.

According to market research firm Kantar, the frequency and number of purchases, as well as the average amount spent for gluten-free products, continues to increase — up 6% compared with 2019.

In this context, it’s hardly surprising that gluten-free alternatives are becoming increasingly chic.

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