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Puma Lost It’s CEO To Rival Adidas, Or Did Adidas Just Steal Him Back?


Ноя 15, 2022

Key Takeaways

  • Adidas has hired former Puma CEO Bjørn Gulden as its new chief executive officer.
  • Adidas shares spiked more than 20% after rumors and eventual confirmation of the hiring.
  • Gulden faces challenges including an expensive split with Kanye West and the fallout from a Chinese boycott of the brand.

On November 9, Adidas announced that it would replace its Chief Executive Officer Kasper Rørsted with Bjørn Gulden, with the change taking effect on January 1, 2023. Gulden recently left the role of CEO at Puma, a major competitor for Adidas. While at Puma, Gulden helped sharpen the company’s focus on sports and improved both profitability and reputation.

How will this change impact investors?

Background on Adidas and Puma

Adidas is a German multinational company that holds the for title of largest sportswear company in Europe and second-largest in the world behind Nike. The company got its start in 1924 when brothers Adolf and Rudolf Dassler began making spiked running shoes.

Puma is also based in Germany and is the world’s third-largest sportswear manufacturer. The company began in 1948 when Rudolf Dassler split from his brother Adolf over tensions that grew during World War II and differing opinions over how the company should be run.

As one might expect from two siblings running businesses in the same industry, Adidas and Puma experienced a fierce and bitter rivalry. The companies’ headquarters in their hometown of Herzogenaurach are separated by the Aurach river, with Adidas to the north and Puma to the south.

The rivalry transcends business and continues to this day. For example, Herzogenaurach has two soccer teams: 1.FC Herzogenaurach is historically sponsored by Puma, while ASV Herzogenaurach is historically sponsored by Adidas. Some families in the town still hold loyalty to one company or the other thanks to generational employment. There are very few families who split loyalty between the brands.

Despite the intense rivalry, Adidas has long been the larger and more successful business of the two. It has net sales that roughly double Puma’s and a larger market capitalization.

Who is Bjørn Gulden?

Bjørn Gulden is a Norwegian former professional soccer player. He spent his most recent years working as CEO at Puma. While at the company, he used both his sporting and business networks to refocus the company on sportswear and improve Puma’s reputation.

This is Gulden’s second tour with Adidas. He previously worked at the company in the 1990s. Between that time and his time at Puma, he also served as CEO of jewelry brand Pandora, managing director at Deichmann SE, a shoe retailer, and in multiple management positions at clothing maker Helly Hansen.

Thanks to his significant industry experience and time as a professional soccer player, Gulden is seen as closer to the products that Adidas is producing than outgoing chief executive Rorsted. Rorsted is viewed as a more financially-focused executive and was responsible for greatly expanding Adidas’ online presence and sales. Despite this, revenue growth lagged behind both Nike and Puma under his tenure.

What is Gulden Facing at Adidas?

Gulden is joining Adidas at a somewhat difficult time for the company. Though it has by no means fared poorly over the past few years, it has significant challenges to overcome in both the immediate and medium-term future.

Of immediate concern is a Chinese boycott of the company due to Adidas’ participation in a consortium of brands that raised concerns about allegations of forced labor occurring in China’s Xinjiang region.

This boycott caused the company’s revenue to fall by 16% in the second quarter of 2021 and 15% in the third quarter of 2021. This gave Chinese sportswear companies an opportunity to expand their market share in the world’s largest market. Adidas will need to work to restore its brand’s strength in China.

Adidas also faced a major financial hit due to its partnership with Kanye West. Adidas ended the partnership in October after a series of controversies including anti-semitic posts on Twitter. Prior to the split, Adidas had produced the popular Yeezy line of sneakers. The company claims that this could lower its net income by as much as 250 million euros this year.

In the less immediate future, Gulden faces rising fears of a recession, as well as ongoing inflation and supply chain issues caused by fallout from the COVID-19 pandemic and the war in Ukraine.

How it Impacts Investors

The market seems excited by the prospect of Gulden taking over Adidas. When news first broke that Adidas was speaking with Gulden about taking the helm of the company, shares spiked by 20%. Shares rose even further when the news became official.

On the other hand, Puma’s stock has not seen significant movement in either direction with the announcement of its CEO’s departure.

Adidas remains a much larger brand than Puma, producing 6.4 billion euros in sales in the third quarter of 2022 compared to Puma’s 2.35 billion euros in sales. Gulden will be tasked with ensuring that Puma does not gain any ground.

Investors who feel confident that Gulden will be able to resolve Adidas’ issues with its celebrity partnerships and restore its brand reputation in China might be interested in investing in the company. Less confident investors may want to look elsewhere or consider investing in a competitor.

There’s also the question of whether Gulden’s work is already priced in. Adidas stock jumped more than 20% between the time rumors of talks between Adidas and Gulden surfaced and the time that he joined the company. He may have to outperform his high expectations to have a further upward impact on the company’s stock.

Bottom Line

Bjørn Gulden is an experienced executive who also has a professional soccer background, making him an ideal candidate. The fact that Adidas has lured him away from a major competitor is a further win for the company. Though he faces significant challenges, the market seems to believe in his leadership and ability to help Adidas navigate the next few years.

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