By: David McHugh & AP Staff
Adidas has appointed Bjørn Gulden, the CEO of rival Puma, as its new chief executive, and he will take over the German sportswear brand in January as the company weathers the fallout from its split with the rapper formerly known as Kanye West.
Gulden will replace Kasper Rorsted, Adidas’ CEO since 2016, whose departure was announced in August. Adidas said at the time that Rorsted would hand over during the course of next year but said on Tuesday that he and the supervisory board “mutually agreed” that he will step down and leave the company Friday.
Chief Financial Officer Harm Ohlmeyer will head Adidas until the end of the year. He takes the helm temporarily after the company ended a partnership with Ye late last month amid mounting outcry over the rapper’s offensive and anti-Semitic remarks.
Adidas, which followed other companies in cutting ties with Ye, is expected to take a hit of up to 250 million euros (dollars) to its net income this year from the decision to immediately stop production of its line of Yeezy products and is left searching for another star to help it compete with ever-larger rival Nike.
Gulden, a 57-year-old Norwegian who was once a professional soccer and handball player, has been Puma’s CEO since 2013. He has worked at Adidas before and was its senior vice president of apparel and accessories from 1992 to 1999.
He also has served as CEO of Danish jewelry brand Pandora, managing director of footwear retailer Deichmann and president of Rack Room Shoes and is board chairman at Danish food retailer Salling Group.
Gulden “knows the industry extremely well and draws on a rich network in sport and retail,” Adidas supervisory board chairman Thomas Rabe said in a statement.
“As CEO of Puma, he reinvigorated the brand and led the company to record results,” Rabe said, adding that the Adidas board “is convinced that Bjørn Gulden will head Adidas into a new era of strength and is looking very much forward to a successful cooperation.”
Puma, which like Adidas is based in the southern German town of Herzogenaurach, said its chief commercial officer, Arne Freundt, will replace Gulden as its CEO.
In other Adidas related news, the AP also reported that the sportswear company on Wednesday lowered its earnings forecast for the year to account for losses from ending its partnership with the rapper formerly known as Kanye West over his anti-Semitic remarks.
The German shoe and sportswear maker cut its sales and profit outlook for the year as part of its third-quarter earnings statement, even as the company’s chief financial officer said the profitability of the Yeezy shoe collaboration with Ye had been “overstated.” The company would largely offset the impact of the breakup next year by no longer having to pay royalties and marketing fees for the brand, CFO Harm Ohlmeyer said.
The company halved its expectations for net profit from continuing operations to 250 million euros ($252 million) this year from 500 million euros. That matched its earlier statement that ending the partnership with Ye would cost it 250 million euros in profits.
Adidas also lowered its revenue forecast for the year to a low single-digit increase from a mid-single-digit increase.
The Oct. 25 split with Ye, with production of all Yeezy products halted and royalty payments ended, will leave Adidas searching for another star to help it compete with ever-larger rival Nike. Adidas also is facing internal upheaval, with its CEO Kasper Rorsted stepping down Friday. He was previously expected to hand over next year, but the company announced the quicker change on Tuesday as it named Puma CEO Bjørn Gulden as his replacement.
Adidas faced pressure to split with Ye as other brands did earlier over the rapper’s antisemitic comments in interviews and social media, including a Twitter post earlier this month that he would soon go “death con 3 on JEWISH PEOPLE,” an apparent reference to the U.S. defense readiness condition scale known as DEFCON. He was suspended from both Twitter and Instagram.
Adidas owns the rights to product designs except for the Yeezy name and is developing plans for what to do with existing inventory.
Ohlmeyer said on a conference call with reporters that the profitability of the Yeezy business had been overstated because its costs only included expenses directly related to the products and not central overhead costs borne by the company.
“In other words, it does not include any further central cost allocation for sourcing, digital, retail, or any other services that this part of our business has been benefitting from and that were essential for its success,” Ohlmeyer said.
“At the same time, we will save around 300 million euros related to royalties and marketing fees; in combination, this will help us to compensate the majority of the top and bottom line impact in 2023,” he said.
The Yeezy brand accounted for up to 15% of Adidas’ net income, Morningstar analyst David Swartz said in a note Oct. 26.
The company had already cut its full-year earnings forecasts five days before announcing its split with Ye. The earlier outlook revision cited slowing activity in China, where severe restrictions aimed at limiting the spread of COVID-19 have held back the economy, and clearance of elevated inventory levels.
Net income for the third quarter from continuing operations was 66 million euros, down from 479 million euros in the same quarter a year ago.
The decrease largely reflected 300 million euros in one-time costs, the majority of it from winding down the company’s business in Russia. (AP)