After losing ground to Nike and Under Armour, Adidas wants investors to know it's taking the idea of a turnaround seriously. And to succeed, the German company has to win back customers in the United States.
The job falls to Mark King, who previously ran Adidas' golf division, TaylorMade, but who was tapped in April to re-ignite Adidas' struggling North American sales. In 2014, those sales slipped 7 percent and fell behind upstart Under Armour to third place in the United States. (Tweet this)
At its 2015 Investor Day in Herzogenaurach, Germany, King outlined his turnaround strategy. King's mission is to convince American consumers and athletes that Adidas is, as he succinctly puts it, "cool." To do that, the company will focus on product development and other innovation.
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"We have to connect there," King said. "We'll do it through big advertising, open source, newsrooms and social media, along with strong retail partnerships, to show our products and tell our stories better."
"I don't think America was a priority in the past," King said.
His message now: That's changed. To prove it, the company will relocate 75 designers, developers and marketing people from Germany to the United States. Adidas will run advertising campaigns for the next three years, making what the company claims is its biggest investment ever in telling the brand story.
The company is working to bring back the cool factor by targeting major U.S. cities. The company plans to open stores over the next 30 months in locations such as Chicago, Miami and Atlanta—locations that Adidas has identified as "influencer cities."
Adidas has 30 stores in the United States, and a total of 460 stores globally. It plans to have 55 concept stores in the United States by 2017.
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Beyond new stores, existing Adidas retail locations will get a reboot. "We have stores out there right now that we are not proud of," King said. "We will either update or close stores down."
The company is working on new products with Kanye West, the singer whose $350-per-pair limited-edition Yeezy boot by Adidas sold out almost immediately and created a surge of 150,000 downloads to the Adidas app in a week. King said there are plans to release new Kanye products every season, but he's staying mum on what to expect.
To be the best sports brand in the world, we have to be the best sports brand in America.Mark KingAdidas
Adidas will also try to introduce less-expensive shoes. King said the bulk of business in the United States needs to fall in price to a range of $70-$100, versus shoes like the Adidas Boost, which can cost between $120-250 dollars.
"If we are going to win market share in any footwear category, we have to have strong franchises in these midpoints," he said. The brand hopes to make use of shoe technology it calls Bounce, which is similar to what goes into the Adidas Boost, but which costs less.
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Adidas expects profit growth of 15 percent per year until 2020, with currency-adjusted sales reaching $24 billion, from $14 billion currently.
That would put Adidas back in the No. 2 spot; Nike is targeting $36 billion in revenue by 2017.
"To be the best sports brand in the world," King said, "we have to be the best sports brand in America."