Adidas Confirms Kasper Rorsted to Succeed Herbert Hainer as CEOBy and
Shoemaker's stock advances as much as 12% in Frankfurt
Rorsted is `perfect fit' for German sportwear maker: analyst
Rorsted, 53, will join the Adidas board on Aug. 1 and take over as CEO two months later, the Herzogenaurach, Germany-based company said Monday. Like Hainer, he is stepping down early from his role, sending Adidas shares soaring and Henkel slumping.
“This is a significant positive for Adidas and the investment case,” Graham Renwick, an analyst at Exane BNP Paribas, said in a note, describing Rorsted as “a perfect fit.”
The new CEO faces a tough task to revive growth at Adidas, which has been losing ground to industry leader Nike Inc., as well as newer competitors like Under Armour Inc. His record in almost eight years in charge of Henkel provides grounds for optimism: under his leadership, the company’s shares have tripled, while the operating profit margin has widened to record levels.
Adidas rose 7 percent to 89.89 euros at 2:22 p.m. in Frankfurt, after earlier posting the steepest gain since November 2008. Henkel preferred shares fell 4.8 percent to 89.03 euros.
The appointment ends a near yearlong search for a successor to Hainer, the longest-serving CEO in Germany’s benchmark DAX Index. Hainer has presided over a series of forecast cuts, hurt by the shrinking golf market and the ruble’s slump, which eroded the value of its business in Russia.
Rorsted will satisfy calls from some Adidas investors including Southeastern Asset Management Inc. and Union Investment for an external appointment. Hainer, 61, has led the company since 2001 and had vowed to stay until the end of his contract in March 2017.
“We welcome the naming of Rorsted as Hainer’s successor and hope that with this the long dry spell of profitability at Adidas comes to an end,” said Ingo Speich, a portfolio manager at Union Investment in Frankfurt. “The stock reaction speaks clearly.”
At Adidas, Rorsted will need to revive growth that has faltered in recent years as Nike makes inroads in Europe and Adidas’s U.S. business weakens.
One of his main challenges will be to close a gap in profitability between the two companies. Adidas’ operating margin, a measure of what a company keeps of sales after production and labor costs, has run at about 7 percent the past year, compared with 14 percent for Nike.
The difference in profitability “is Adidas’s main weakness,” Volker Bosse, an analyst at Helvea Baader Bank, said in a note.
Danish-born Rorsted said as recently as November that Henkel’s growth ambitions would keep him at the helm of the company until the end of 2017. The manager, who took the reins at Henkel in 2008, has regularly been cited by the German press as a candidate for CEO jobs at other German companies such as Adidas and industrial gas giant Linde AG.
Rorsted’s push into North America with brands such as Persil detergent and Schwarzkopf shampoo was key to Dusseldorf-based Henkel’s strategy to catch some of the company’s biggest competitors in the consumer goods market.
He also brings tech-industry experience to Adidas, which may serve him well as the company seeks to quadruple e-commerce sales by 2020 and invests in robot-equipped factories to bring some production back to Europe from Asia, and eventually into stores.
The executive worked at PC maker Compaq in the 1990s and early 2000s, then stayed on two more years after Hewlett-Packard acquired it in 2002.
Henkel earlier today named the head of its beauty care business, Hans Van Bylen, as Rorsted’s successor.
(A previous version of this story corrected the Exane BNP Paribas analyst’s name.)
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