German sportswear giant Adidas has vowed to double payouts to shareholders to up to €9 billion over the next five years, as it seeks to lift profits by increasingly selling direct to consumers.
Chief executive Kasper Rorsted on Wednesday unveiled a plan to lift revenues by roughly a third to more than €30 billion a year by 2025, promising that 80 per cent of that growth would be generated by Adidas's own online and physical stores.
Ecommerce is expected to be the single biggest driver of growth as the world’s second largest sports brand seeks to double online sales by 2025 to up to €9 billion. The group plans to increase marketing spend by €1 billion over the period and invest another €1 billion into its digital operations.
“Building direct relationships with its target audience plays an increasingly important role,” Adidas said in a statement at the group’s capital markets day, adding that it would focus “its operating model to address consumers more directly”.
Adidas shares were up 5.5 per cent by lunchtime in Frankfurt. The stock has climbed 35 per cent over the past 12 months - roughly in line with the wider German market but lagging its larger rival Nike, which is up more than 50 per cent over the same period.
Every other product
By 2025, Adidas aims to sell every other product directly to consumers, compared with 33 per cent before the pandemic. Cutting out independent retailers allows manufacturers to increase profitability as they can keep the retail margins to themselves.
The company’s new “Own the Game” strategy targets annual revenue growth of 8 to 10 per cent a year. “That means we will outgrow the industry globally,” Mr Rorsted told investors. The wider industry is growing roughly 65-7 per cent, said Adidas. – The Financial Times Limited 2021
