Adidas Targets Profit Growth of 15% a Year

By Ellen Emmerentze Jervell

HERZOGENAURACH, Germany--Adidas AG (ADS.XE) presented its new strategy Thursday and said it expects net profit to rise 15% a year until 2020.

The world's No. 2 sporting goods company said the strategy is based on three elements-speed, growth in major cities, and investment in its core brands. It expects to outperform the sporting goods industry with group sales growing at a "high-single-digit rate" for each of the next five years.

"We will accelerate our growth story and deliver superior returns to our shareholders," Chief Executive Herbert Hainer said.

Adidas said it would reduce its production lead times. It also plans to expand its e-commerce business to above 2 billion euros ($2.19 billion) by 2020.

Adidas plans to "over-proportionally" invest in talent and marketing in metropolitan areas around the world. Its key focus will be on six cities: Los Angeles, New York, London, Paris, Shanghai and Tokyo.

"If we win running in New York and Los Angeles, we will win running in the U.S.," Roland Auschel, Head of Adidas's global sales said.

The Adidas stock price has climbed steadily ahead of the new strategy launch, closing at EUR70.43 Wednesday.

In 2010, Adidas released its last five-year strategy, anticipating sales growth of more than 45% to EUR17 billion. The company last year admitted it would not be able to meet these targets.

Earlier this month, the company reported 2014 net profit of EUR490 million, down from EUR787 million the year before, on sales worth EUR14.5 billion.

-Write to Ellen Emmerentze Jervell at [e-mail]

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