How much is one person worth as an employee? Who can say for sure? In the case of Kasper Rorsted, the exchange had an answer. On January 18, 2016, the day of the announcement of his switch from Henkel to Adidas, the Dane stirred up roughly three billion euros: the Adidas stock gained spontaneously by twelve percent, while the owner preference shares from Henkel got cheaper by five percent in the meantime.
Is this high evaluation of Rorsted, who officially took over leadership of the second largest sporting goods manufacturer in the world on October 1, justified? You hardly hear anything negative about the 54-year-old; most commentators go out of their way to sing his praises. “Kasper Rorsted is a superstar,” wrote the German newspaper “FAZ”; the “man like a machine” (“Die Zeit”) has earned himself the title of “margins magician” (“finanzen.net”).
The Kasper Rorsted effect: Adidas stock is DAX frontrunner
The fact is: Investors’ expectations for Rorsted are enormous, likewise the premature praises. Since January, Adidas stock has rushed from record to record, and has nearly doubled its rate. “In retrospect, everything always looks very rosy,” the manager said as early as 2010 regarding his impressive career. “Sometimes I was lucky enough to be at the right place at the right time.”
Kasper Rorsted seems to be in just the right place at Adidas. The sporting goods manufacturer from Herzogenaurach stands at the threshold of an upheaval. Restructuring and digitalization, nobody else seems more suited for the groups’ great tasks than the Denmark native, who in addition to English also speaks German and Swedish fluently and partially financed his studies in the USA himself through hard jobs.
Rorsted has lived in Germany since 1991, is a former handball junior national player, a passionate skier, tennis player, and soccer fan – conveniently of FC Bayern, the club that Adidas has had a ten percent share in for 15 years. Rorsted’s wife has been living with their four children back in Munich since 2013. According to insiders, his family did not feel very at home at the Henkel headquarters in Düsseldorf.
On a visit to Runtastic in a polo shirt
Mobility is a matter of course for manager Rorsted; he doesn’t steer the group headquarters from his desk. The son of an economics professor searches deliberate for contact with employees and customers. Instead of holding audiences in the executive office, he draws his own conclusions on site. “To lead virtually, I need to know my employees personally, even if they’re scattered around the globe,” explains Rorsted.
This is well received with employees and subsidiaries. Runtastic founder Florian Gschwandtner raves about the visit from his new boss, who introduced himself in Linz in September, incidentally very dressed down in a gray Adidas polo shirt. “What I especially liked about Kasper Rorsted was his international orientation,” said Gschwandtner in an interview with ISPO.com after Rorsted’s visit to the Adidas subsidiary in Linz. “He had lived in Silicon Valley for a long time and is impressively farsighted.”
Harvard graduate Kasper Rorsted carries the innovative spirit of the technology Mecca within him – not just because of his time on America’s west coast at Oracle, Compaq, and Hewlett Packard. Two years ago, the Dane snagged 20 Henkel executives and took them to visit a dozen firms in Palo Alto. “Henkel Goes to the School of Silicon Valley,” read the “FAZ” title.
At Adidas, Kasper Rorsted now finds himself faced with five big challenges as new CEO. ISPO.com names them.
1. Make Adidas more profitable
The three-stripes brand is broadly positioned; Reebok and golf brand TaylorMade, and ice hockey brand CCM contribute to the neat group revenue in the amount of 19 billion euros – but ensure neither relevant growth nor profits. Adidas (approx. 5 percent) doesn’t come close to Nike’s net margins (approx. 12 percent) by far.
The Adidas shareholders want Rorsted to streamline the portfolio and make the group more profitable. That means that Rorsted should do what Hainer long shied away from: calling certain divisions into question. After all, Hainer insisted on initiating Adidas’ extensive departure from the golf business himself: the group is searching for buyers for the brands TaylorMade, Adams, and Ashworth.
Adidas has set ambitious goals for itself by 2020: “Our profits are to grow significantly faster than our turnover, at an average of about 15 percent per year.” Rorsted has proven that he’s the right man for the job in his eight years as Henkel CEO: The Dane parted with 80 percent of the below-average performing divisions, and the consumer goods giant’s net margins rose from seven to over ten percent.
More and more speculation is emerging on a separation from Reebok. Eleven years after its acquisition by Adidas, the fitness brand is achieving less revenue (1.75 billion euros) than in its first fiscal year under Adidas leadership (1.98 billion). Things are slowly progressing again – too slowly for the “accelerator” Rorsted?
What speaks against a separation from Reebok: Adidas would forfeit more than half of its important North American business in one fell swoop. That’s because Rorsted should actually:
2. Seize shares in the USA, fend off Under Armour
In the USA, Adidas is behind Nike and shooting star Under Armour, still at only 3rd place. The German’s market share is only five percent in the largest sporting goods market in the world – an unsatisfactory situation. Analysts say that Adidas has proceeded too hesitantly, especially with sponsorship contracts with stars in the oh-so important US sports of basketball, football, and baseball.
Market observers are of the opinion that Rorsted would above all need to be measured by progress in the USA, so that Nike doesn’t pull away any further. The first Adidas measures – among them, poaching Nike designers and investing more in marketing – are already availing. The cooperation with music superstar Kanye West was costly, but a major marketing success; people lined up outside of Adidas stores for the shoes designed by the rapper. The cooperation was drafted under the brand Yeezy.
“Hard work and commitment aren’t enough,” Adidas courts brave employees in a YouTube video (see below) and demands: “Come on, you freaks! Unleash your creativity!” On its investor relations site, Adidas explains: “The center of ‘Creating the New’ is the goal of further accelerating our grown by significantly increasing the covetousness of our brands.”
Adidas is investing in influencers. To get young women excited about the Olympic Games, the Frankish sporting goods manufacturer invited female social media stars to a villa in Rio. And Adidas took lots of money into hand for the cooperation with NBA star Derrick Rose: the contract with a duration of over 13 years is set to be endowed with roughly 185 million dollars. Aside from that, Adidas will have been an official outfitter for the NHL for seven years in the 2017/2018 seasons.
In addition to Nike, Adidas needs to have a showdown in the USA with Under Armour, who made headlines in Germany with the sponsorship with the cult club FC St. Pauli. To date, their international business only brings in 9 percent of the group’s overall revenue. Under Armour wants to get a stronger foothold in the German market. Lots of work for Rorsted.
Editorial work: Michael Wiemer