Kasper Rorsted Has Just Had Three Major Tasks Waiting For Him At Adidas CEO.

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A new CEO is coming: Kasper Rorsted from Denmark. The first challenge he faces is how to narrow Adidas and her many years of competition and the world's largest sporting goods group.

The gap between them.

The choice of new shareholders

The incumbent CEO Herbert Hainer, Adidas, has been holding this position since 2001.

His opponents believe that although the total sales volume has increased by about 2/3 in the past more than 10 years, the profit margin of the group has not risen. The operating profit rate in 2015 was only 6.3%, far below the Nike 14%.

Last year, the founder of the Nasser Sawiris, Southeastern Asset Management of Egypt, the Mason Hawkins Hawkins and Belgium billionaire Albert Frere and other new investors bought part of the stake in Adidas, and a representative of the Sawiris and the appointment Committee became a member of the board.

Since then, the board has chosen Kasper Rorsted as the new CEO of the group.

Kasper Rorsted previously worked in Henkel, Germany consumer goods group (Han Gao), and greatly enhanced the profitability of the group.

During his job in Hanko, Germany, Rorsted sold 80% of the group's flag.

A lot of resources have been invested in more famous top brands, such as Persil, etc.

He is also very strict in cost control, outsourcing many important sectors to low price overseas countries.

In addition, in order to revive Henkel's performance in the US market, he has lived in the United States for a long time.

All these factors satisfy investors' partial expectations, including reducing group costs, continuing to promote the development of the US market and streamlining their brands. Investors are confident of him.

Since its announcement in January that he will act as Adidas CEO, Adidas's share price has risen by about 2/3.

Scramble for the US market

Relying on cooperation with Kanye West and Pharrell Williams and sports stars, plus a lot of marketing investment, Adidas has begun to seize the US market share from Nike.

The latest quarterly report released by Nike this week shows that although sales and profits have increased, the market share has shrunk under the competition of Adidas and Under Armour.

But this does not satisfy investors.

An investor's research shows that so far, Adidas's market in North America is still mainly concentrated in the fashion industry and the top big cities, and there is much room for improvement in the sports market and the two or three tier cities.

Therefore, one of the important expectations of investors for Rorsted is that they can continue to exert their strength in the North American market and further encroach on the Nike market.

But compared with Adidas from Germany, Nike, an American company, has "home advantage" in North America.

To make up for this gap, Herbert Hainer acquired the same sports brand Reebook (Reebok) from the United States in 2004 at the price of 38 billion.

But the result of this paction is not satisfactory. In the next more than 10 years, Reebok struggled and even became a "bad asset" of many shareholders eager to sell.

Streamlining brand portfolio

Because of this, many shareholders' expectation for Rorsted is that they can streamline their brand portfolios, sell poorly performing brands led by Reebok, and evaluate and adjust their product mix and sales structure.

Prior to this, Hainer has consistently refused to sell Reebok, and said its performance has improved, and will benefit from the rapid development of the fitness industry in the future.

One of Adidas's shareholders, Ingo Speich, the investment manager of Union Investment (joint venture), a retail fund, said: "we hope that Rorsted will adjust the product mix and sales structure of the company as a first step in promoting Adidas development after he takes office."

Ingo Speich is also one of the opponents of Herbert Hainer.

"We need to re evaluate Reebok, and their performance has affected the profitability of the company," said Tim Albrencht, one of Adidas's shareholders and a fund manager of Deutsche Asset Management.

However, selling Reebok is not easy.

Peter Steiner, an analyst at Bankhaus Lampe, a private bank in Germany, said that because of the deep cooperation between Reebok and Adidas, it would be very difficult for Reebok to sell Reebok. The probability of sale is only 30%, and the selling price may be only $2 billion.

Previously, Adidas group has decided to sell its losing golf business (including TaylorMade, Adams, Ashworth, etc.), focusing on the core sports apparel and footwear business of the development group.

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Control cost and improve efficiency

Some investors believe that Rorsted should reduce the opening speed of new stores and adopt a strategy similar to that of Nike, focusing on the development of flagship stores and e-commerce businesses in high quality sectors.

As of last year, Adidas has 2722 stores in the world and plans to open another 500 to 600 new stores by 2020.

In terms of electricity providers, Adidas plans to increase its electricity supplier sales to 2 billion euros by 2020.

This figure is very large compared to Nike's projected sales of $12 billion 500 million in 2020.

Investors expect that Rorsted will take advantage of his experience in Henkel and improve the outsourcing, logistics and advertising system of Adidas to improve efficiency.

However, due to the high cost of sports sponsorship, it is very difficult to reduce the cost of marketing.

Another way to increase efficiency is to streamline the mix of commodities.

Adidas plans to reduce 1/4 of its products by 2020, focusing on better sales of Superstars or UltraBoost.