Adidas faces a pivotal moment as it moves forward without its long-standing partnership with Germany's national football team, a relationship dating back decades. The loss of this sponsorship to Nike earlier this year signals a significant shift for both Adidas and its brand strategy.

Under CEO Bjorn Gulden, who took the helm in January 2023, Adidas is navigating turbulent waters. Gulden, known for his intuitive leadership style, aims to rejuvenate Adidas amidst challenges like the fallout from rapper Ye's controversial comments and accusations of corruption in China.

Strategic Changes Under Gulden

Since Gulden's appointment, Adidas has seen its stock price more than double, driven in part by the success of its Samba shoes. These classic sneakers, popularized by celebrities like Bella Hadid and Kendall Jenner, have been pivotal in Adidas's turnaround strategy.

The Samba craze underscores Gulden's focus on product innovation and consumer demand. By accelerating the release of Samba and similar terrace-style shoes like Gazelle and Spezial, Adidas has regained momentum in the market.

Financial Performance and Market Strategy

Adidas has exceeded financial expectations under Gulden's leadership. Despite initial concerns over the inventory of Yeezy footwear, which Gulden had warned might require write-offs, Adidas has managed to sell much of it successfully. This has contributed to revised operating profit forecasts, now expected to reach €700 million, up from earlier projections of €500 million.

In the first quarter alone, Adidas reported an 8% increase in sales overall, with a 5% rise excluding the Yeezy inventory reduction. Analysts anticipate Adidas surpassing €1 billion in operating profit, reflecting Gulden's effective management amidst challenging market conditions.

Retail and Partnership Strategies

Gulden's strategy includes a renewed focus on retail partnerships, a shift from previous emphasis on direct-to-consumer sales. This adjustment has addressed retailers' frustrations with Adidas's availability and helped secure more shelf space in major outlets like Dick’s Sporting Goods.

The CEO's efforts to rebuild relationships with retail partners have been pivotal. Analyst Cristina Fernandez notes, "As footwear sales picked up, retailers felt more confident in stocking Adidas products, which also boosted apparel sales."

Challenges in the Chinese Market

Adidas faces challenges in China, where geopolitical tensions and consumer backlash against Western brands have affected sales. Allegations of corruption among Adidas's marketing staff in China further complicate its market strategy.

Despite these hurdles, Gulden remains optimistic about Adidas's prospects in China. He emphasizes improvements in supply chain responsiveness and adapting to local consumer preferences as crucial steps forward.

Global Brand Ambitions

Looking ahead, Gulden aims to position Adidas as the premier global sports brand. His vision includes expanding Adidas’s presence in Olympic sports and strengthening its foothold in cricket and Formula 1 racing, areas where he previously succeeded with Puma.

Adidas's resurgence in running, basketball, and football remains pivotal. The launch of the Adizero Adios Pro Evo 1, a high-performance racing shoe, has been a standout success, aligning with Gulden's strategy to innovate and capture niche markets.

Competition with Nike

Nike's dominance in basketball and its strategic sponsorships pose challenges for Adidas. Gulden acknowledges the competitive landscape, noting the importance of strategic restraint in bidding for sponsorships against Nike's aggressive financial commitments.

Despite losing high-profile sponsorships like Germany's national football team to Nike, Gulden remains resilient. He sees opportunities to narrow the gap with Nike, especially as Nike navigates internal challenges and restructuring efforts.

Future Outlook

Adidas's future success hinges on Gulden's ability to sustain momentum in product innovation and market expansion. With a focus on consumer trends and strategic partnerships, Gulden aims to capitalize on Adidas's brand heritage while embracing new growth opportunities.

Investors and analysts remain cautiously optimistic about Gulden's leadership. As Adidas continues to evolve its brand strategy under Gulden’s stewardship, the company’s performance in key markets and sectors will be closely monitored.

Adidas's journey post-Ye and amidst shifting market dynamics highlights the resilience and adaptability required in today's competitive sports apparel industry.