E Point Perfect

Adidas to replace chief executive three years early as China sales slump

Sportswear brand Adidas Kasper Rorsted
Amid falling Chinese sales Adidas is to replace CEO Kasper Rorsted
// Adidas boss agrees to step down next year amid impact of Ukraine war and China sales
// The share price of the German sportswear giant have near halved in the past 12 months

German sportswear giant Adidas will replace its chief executive Kasper Rørsted next year, three years before his contract is up.

The move comes at a time when the company continues to suffer from falling sales in China and while it is still impacted by the impact of the war in Ukraine.

Rørsted took over in 2016 and the Dax-listed company announced on Monday that he will hand over the position during 2023, adding that a successor had not yet been identified.

Shares in Adidas have fallen since the announcement and are now trading at around half their 12-month peak.

Rørsted, a former executive of cleaning products manufacturer Henkel, is to remain to “ensure a smooth transition at the helm of the company” Adidas said in a statement, but did not elaborate on why he was leaving early.

Adidas chair Thomas Rabe credited Rørsted with strategically repositioning the company as it “fast-forwarded its digital transformation”.

He added that the executive had expanded Adidas’ online business “by a factor of more than five” and doubled sales in North America.

But he also said that “after three challenging years that were marked by the economic consequences of the pandemic and geopolitical tensions, it is now the right time to initiate a CEO transition and pave the way for a restart.”

READ MORE: Adidas sees operating profit drop 28% in Q2 despite sales increase

Rørsted said his tenure had “been marked by several external factors that disrupted our business significantly,” and that it “required huge efforts” to master these challenges.

The move is the second high profile departure at Adidas, following the retirement of long-standing CFO Andrew Hackett last month.

Adidas last month lowered its earnings guidance for 2022 by over £420 million because of a substantial decline in its China business, after already lowering its forecasts in May, with sales down 35% in the last quarter compared with 2021, amid widespread lockdowns and supply chain chaos.

It also announced that supply chain constraints in Russia and surrounding countries had cost the company over £250 million in sales.

The company has faced a nationalist backlash in China after it announced that it had asked its suppliers not to buy cotton from the Xinjiang region, because of human rights concerns.

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