Adidas proposes five-year plan to focus on e-commerce development

Adidas ’ new five-year strategy, called “Own the Game,” is the first under Chief Executive Kasper Rorsted, who has won plaudits for streamlining operations since taking the helm in 2016 amid a long boom in retro footwear.

The new plan is more ambitious than Adidas ’ five-year plan through 2020, which targeted annual sales growth in the high single-digit range. Adidas achieved that goal in 2018 and 2019 but then suffered a 16% revenue drop last year.

Adidas shares are still below their January 2020 highs. Shares of archrival Nike Inc. have surged to record levels since last summer.

The company is seeking to reduce its reliance on middlemen with a goal of generating half of its revenue from direct-to-consumer business by 2025. That includes doubling e-commerce sales to 9 billion euros. Such a move would make up much of the sales growth.

To achieve this goal, Adidas will invest more than 1 billion euros in digital technology , including 3D design , consumables procurement and advertising work. This year alone, it has recruited more than 1,000 technical and digital talents.

Meanwhile, Adidas plans to produce nine out of 10 products sustainably by 2025, meaning they will be made from recyclable or biodegradable materials, or designed to be reused.

The company said it expected to distribute 8 billion to 9 billion euros to shareholders through dividends and share buybacks by 2025.

Earlier on Wednesday, Adidas forecast sales would rebound this year to around 2019 levels as the impact of the pandemic abates , driven by particularly strong demand in Asia and Latin America this year.

The retailer hopes the strategy will deliver on some big growth targets, including net sales growth of 8% to 10% per year and net income growth of 16% to 18% per year. According to CEO Kasper Rorsted, DTC will drive net sales growth of more than 80% over the next four years.

Ohlmeyer noted that the strategic shift is expected to bring "substantial" market share gains for Adidas, as well as higher revenue and margins. Greater investment in digital and marketing will drive this growth: the company plans to invest 1 billion euros in marketing by 2025 compared to 2021, and more than 1 billion euros in its digital transformation.