By Geoffrey Smith
Investing.com -- Adidas (ETR:ADSGN) stock rose again on Tuesday as the German sportswear giant confirmed that it has lured Bjorn Gulden away from rival Puma to be its new chief executive.
Gulden, who will replace outgoing CEO Kasper Rorsted at Adidas on January 1st, will inherit some daunting challenges at a group that has suffered a sharp drop in profitability in recent months due to problems in both the U.S. and China. The group issued its second profit warning in three months only two weeks ago, saying it expects profits this year to be down some 60% from 2021.
Some of Adidas' problems will be familiar to the Norwegian, given that Puma, too, has suffered from an end to the pandemic boom in sportswear and casual clothing. However, Adidas' problems have a scale of their own: the company has suffered a consumer backlash against it in China after western activists forced it to distance itself from suppliers in the province of Xinjiang over human rights concerns, along with an urelated public relations nightmare in the U.S.
Its marketing deal with rapper Kanye West, which almost single-handedly restored Adidas' position in the U.S. has unraveled spectacularly in recent weeks. The Bavaria-based group ripped up the deal with immediate effect two weeks ago after West made a series of antisemitic outbursts on social media and elsewhere, the ultimate taboo for a German company. That action is set to cost it €250 million (€1=$0.9995) in profit over the coming holiday season, as well as promising a long and potentially expensive legal battle over the rights to the signature 'Yeezy' footwear range.
Gulden, a Norwegian, will be returning to a company that was one of his first employers after he retired from a career in professional soccer. He was senior vice president for apparel and accessories for seven years in the 1990s. At Puma, his efforts to position the group as a quasi-luxury brand had driven a five-fold increase in the company's stock price before the pandemic bubble popped. Puma stock is down by 60% from its peak in December last year.
By 08:35 ET (13:35 GMT), Adidas stock was up 2.5% in Frankfurt, while Puma stock was down 1.2%. Adidas has risen some 25% since Manager Magazin first revealed Adidas' efforts to bring Gulden on board.