Adidas AG (ADDYY) shares slumped lower Monday after the sports apparel group, and global Nike (NKE) rival, said CEO Kasper Rorsted will depart the company next year.
Rorsted, who was lead the group since 2016, will remain CEO until a successor has been named, Adidas said, with a handover of leadership roles expected in early 2023. Rorsted has been credited with driving significant changes in the world's second-largest sportswear group, including its renewed focus on direct-to-consumer and digital sales that has lead to big market share gains on both Nike's home-turf in the United States and its erstwhile position as market leader in China.
"We would like to thank Kasper for his major achievements. During his tenure since 2016 he has strategically repositioned the company and fast-forwarded its digital transformation," said Thomas Rabe, who chairs the supervisory board of Adidas. "Under Kasper’s leadership adidas has substantially advanced its digital capabilities and grown its online sales by a factor of more than five."
"In North America, the world’s largest sporting goods market, adidas has doubled its sales," Rabe added. "In addition, adidas has strengthened its leadership position in sustainability and increased diversity, equity and inclusion throughout the company."
U.S.-listed Adidas shares were marked 3.45% lower in early Monday trading to change hands at $82.60 each. The group's Germany listed stock fell 3.9%, compared to a 2.2% decline for the DAX performance index, in Frankfurt. Nike shares, meanwhile, were marked 2.16% lower at $110.75 each.
Last month, Adidas slashed its full-year earnings forecast by around 30%, thanks in part to Covid restrictions in China that hammered sales of its sports gear and clothing in the world's second-largest economy and softer discretionary spending in Europe.
Adidas said it sees full-year net income of around €1.3 billion, down from a prior forecast of €1.85 billion, but noted that strength in north and Latin America helped June quarter sales rise 10% from last year to €5.6 billion.
Nike, for its part, cautioned that surging transport costs, as well as a strong U.S. dollar, would eat into profit margins over its coming financial year after it posted stronger-than-expected fourth quarter earnings of 91 cents per share in late June on Street-beating revenues of $12.24 billion, as solid gains in its direct-to-consumer business offset a Covid-linked sales slump in China.
Gross profit margins narrowed 80 basis points to 45%, just shy of Street estimates of 46.6%, as input and transportation costs surged. North America revenues were down 5%, but direct-to-consumer sales were up 7%, helping offset both the impact of a stronger U.S. dollar and the Covid-related slump in China sales.
