Adidas pledges to ‘over-invest’ in marketing as CEO admits ‘we are not as good as we should be’

Adidas increased investment in marketing by 9% in the first quarter as it looks to build “brand heat”.

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Adidas says it plans to “over invest” in marketing, including product, brand and sales, as it looks to continue to overhaul the business and drive growth over the long term.

CEO Bjørn Gulden said the company is making good progress on turning the business around after reporting its first annual loss in more than three decades in March. But admitted: “We know we are not as good as we should be.”

Adidas increased revenues by 8% in the three months to 31 March, with Gulden saying one of the main reasons for this growth is the fact it continues to “invest heavily” (around 12%) in marketing.

The business invested €657m (£561m) on marketing and point of sale in Q1, a 9% increase, with the company planning to invest more over the coming year to “build momentum”.

As part of this drive, Adidas launched its ‘Originals’ campaign last September followed by the ‘You Got This’ campaign at the Super Bowl. It replaces ‘Impossible is nothing’ as its tagline.

“When you see how we look around the world, we have a global frame that facilitates local content, both on the lifestyle area and on the performance area,” Gulden told investors today (30 April). “We are very, very happy with the way the new Adidas actually looks.”

He said the increased “brand heat” this generated and the improved sell-through is supporting the business in building better relationships with retail partners. He said it also “buys us time to continue to invest in making Adidas a better brand and company”.

With this continued investment, Gulden said he hopes Adidas will be “good and healthy” again by 2026.

Long-term focus

Adidas is particularly focused on driving growth over the long term as it looks to reverse its fortunes. Gulden stated the sportswear giant will “not try to optimise short-term profit”.

Gulden admitted previously that Adidas was too reliant on discounting, for example, which is something the business has continued to reduce its focus on over the first quarter. This led to a double-digit increase in full-price sales on its own channels during the period.

Adidas has also reduced inventory levels by 22% compared to last year, the equivalent of €1.2bn (£1.02bn), which is supporting the business’s growth.

Despite challenges stemming from the discontinuation of its Yeezy line following its separation from rapper Kanye West over antisemitic remarks, Adidas managed to generate €150m (£128m) in revenue from remaining Yeezy inventory during the first quarter. It plans to sell an additional €200m over the next three quarters.

Overall, operating profit increased to €336m, up 458.4% from €60m in the same quarter last year, reflecting an operating margin of 6.2% compared to 1.1% in 2023.