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Speaker 1: You may have heard about the rather dramatic business breakup

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Speaker 1: between Adidas and the rapper and designer Kanye West, who

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Speaker 1: now goes by the name ya Yay, has had no

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Speaker 1: trouble keeping himself in the headlines for all kinds of things,

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Speaker 1: including a torrent of anti Semitic rants that ultimately left

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Speaker 1: Adidas no choice but to sever the multi billion dollar

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Speaker 1: arrangement with him last October.

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Speaker 2: Bloomberg has learned that Adidas has to sever ties with you.

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Speaker 3: The rapper formally known as Kanya West now Yea, is

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Speaker 3: facing growing fallout from a recent string of offensive remarks.

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Speaker 3: Adidas or Adidas warns that it may report an operating

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Speaker 3: loss of as much as seven hundred and fifty million

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Speaker 3: dollars this.

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Speaker 4: Year's partnership the Easy brand that was dissolved in octogra

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Speaker 4: after he'd made some anti Semitic remarks. The Audidas before

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Speaker 4: that point had called it the most successful partnership of

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Speaker 4: its kind in the industry in history.

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Speaker 1: Adidas now has to find a way to make up

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Speaker 1: for the loss of it's hugely lucrative Yeasy line of shoes.

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Speaker 5: There's a Yeasy sized hole in their product assortment that

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Speaker 5: they need to figure out how to fill.

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Speaker 1: And what to do with the piles of yeasy merchandise

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Speaker 1: they've still got on hand.

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Speaker 3: It's hard to envision a bigger collection of crises hitting

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Speaker 3: a company all at once.

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Speaker 1: That's Bloomberg reporters Kim Bassin and Tim Love. They've been

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Speaker 1: all over this story for months, and they tell the

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Speaker 1: whole saga in the latest issue of Business Week. I'm

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Speaker 1: West Casova today on the big tag how did this

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Speaker 1: all go so wrong? And can Adidas climb back from it? Kim,

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Speaker 1: Adidas is sitting on a giant pile of money, essentially

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Speaker 1: that they don't have any idea what to do with.

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Speaker 5: There are millions of pairs of unsold sneakers just sitting

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Speaker 5: around and we've been calling it sneaker purgatory in all

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Speaker 5: these warehouses.

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Speaker 6: Around the world.

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Speaker 5: These are Yeasys designed by Kanye West, who now goes

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Speaker 5: by Ya, and since that partnership with Easy collapsed last year,

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Speaker 5: there's now about one point three billion dollars worth of

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Speaker 5: these sneakers just waiting to be sold.

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Speaker 3: When the partnership was canceled in late October, Adidas had

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Speaker 3: already placed orders for many of these pairs to be produced,

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Speaker 3: and so over the months that followed, the sneakers kept

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Speaker 3: piling in from factories in Asia to Didas's warehouses that

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Speaker 3: are scattered around the world. So it wasn't until about March,

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Speaker 3: five months say, after the whole Yeasy collaboration exploded, that

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Speaker 3: Adidas finally he had all the sneakers ready to go

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Speaker 3: in all of its warehouses, and then it just sat there.

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Speaker 1: And that's because this deal fell apart in spectacular fashion.

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Speaker 6: That's correct, it definitely did.

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Speaker 5: This goes back to last fall where Yay started basically

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Speaker 5: yelling on social media at Adidas executives and it kept

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Speaker 5: spiraling from there. He accused them of stealing his designs,

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Speaker 5: He accused them of profiting off of him inappropriately. He

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Speaker 5: said they weren't allowing him into meetings that he should

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Speaker 5: have been in and he was just being mistreated as

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Speaker 5: their most important business partner. From there, he said he

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Speaker 5: wanted to get out of his deals with Corporate America.

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Speaker 5: He was done with Adidas, he was done with GAP,

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Speaker 5: he was done with all the big corporations that he

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Speaker 5: had lined up these long term, huge billion dollar agreements with,

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Speaker 5: and it just started to fall apart.

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Speaker 6: And so the way it fell apart was pretty remarkable too.

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Speaker 3: I mean, he had all this beef with Adidas, and

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Speaker 3: he brought up beef with his other corporate partners like

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Speaker 3: Gap and some mothers. But then beyond that, he just

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Speaker 3: started ratcheting up just wild behavior and saying highly offensive

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Speaker 3: and toxic things.

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Speaker 6: And it happens so quickly.

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Speaker 5: Right, So back in October, I get a phone call

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Speaker 5: in the middle of the night. It's like midnight on

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Speaker 5: a Thursday, I believe, and it's Kanye West and he's

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Speaker 5: calling me to tell me that he wants to get

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Speaker 5: away from corporate America, go out on his own and

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Speaker 5: do everything himself. Like three days later, his lawyers sent

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Speaker 5: a season desists.

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Speaker 6: To Gap saying they want out of that deal.

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Speaker 5: It's only like six weeks after that original phone call

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Speaker 5: where all the deals are gone and Adida says it's

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Speaker 5: terminating his partnership.

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Speaker 1: Kim, can you describe that phone call.

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Speaker 5: There's a point at the very beginning where Yay asked

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Speaker 5: me if he sounds crazy, and he doesn't. He's answering

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Speaker 5: questions thinking several seconds before he delivers like a bar

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Speaker 5: to answer it, and it seemed quite calculated. He seemed

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Speaker 5: like he was first off, legitimately angry at his business

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Speaker 5: partners and really wanting to do something about it.

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Speaker 6: I think at the time I didn't fully.

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Speaker 5: Appreciate that he was going to make two hundred million

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Speaker 5: dollars nearly in royalties off of this Adidas deal last year,

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Speaker 5: and to be willing to just chuck that away was surprising.

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Speaker 1: This deal between Adidas and Kanye West really was the

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Speaker 1: thing that brought the company back, Is that right, Tim.

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Speaker 3: Yeah, I think that's fair to say. There were a

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Speaker 3: couple of things going on. But if you go back

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Speaker 3: in time to the twenty twelve twenty thirteen, Adidas was

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Speaker 3: really struggling, particularly in the US. It was just losing

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Speaker 3: market share and it just seemed driftless. And at one

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Speaker 3: time Adidas was like the dominant sports company in the US.

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Speaker 3: Of course, this was before the rise of Nike, and

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Speaker 3: a pivotal figure in that was Michael Jordan, who this

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Speaker 3: kind of just goes to show it. He was a

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Speaker 3: diehard Adidas fan. He played in Adidas, he wanted to

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Speaker 3: sign with Adidas by you know, early eighties. He's coming

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Speaker 3: out of University North Carolina and these up and comers

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Speaker 3: swashbuckling from Nike. They offer him a deal he couldn't refuse,

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Speaker 3: and Adidas refused to match it. So Jordan went with

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Speaker 3: Nike and the rest is history.

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Speaker 7: On September fifteenth, Nike created a revolutionary new basketball shoe.

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Speaker 7: On October eighteenth, the NBA threw them out of the game. Fortunately,

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Speaker 7: the NBA can't stop you from wearing them where Jordan's

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Speaker 7: from Nike.

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Speaker 3: But if you fast forward to twenty fourteen, by that point,

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Speaker 3: Adidas had made a couple of last ditch efforts to

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Speaker 3: try to re catch Nike. They bought reboch in two

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Speaker 3: thousand and six for about almost four billion dollars. Six

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Speaker 3: years after that, they're looking around and you know that

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Speaker 3: hasn't helped, and they're losing business in the US and

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Speaker 3: they didn't have a lot that was generating buzz.

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Speaker 6: So what do they do? Well.

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Speaker 3: The first thing is they brought in an American for

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Speaker 3: the first time to head up their global brands. His

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Speaker 3: name is Eric led Key, and he kind of created

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Speaker 3: a team. He'd spent a lot of time in Portland

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Speaker 3: before he came to Germany, and he obviously as an American,

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Speaker 3: he really understands the US and he understands kind of

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Speaker 3: the challenges that Adidas employees.

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Speaker 6: In the US space. So he set.

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Speaker 3: Up a team and he empowered a lot of people

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Speaker 3: who really understand the US a lot better than the

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Speaker 3: people who had pre obviously been you.

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Speaker 6: Know, running the show.

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Speaker 3: And they set up partnerships with Pharrell, and they introduced,

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Speaker 3: you know, some new products that were getting buzz.

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Speaker 6: But if you have to go back, the.

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Speaker 3: One name, the one personality that was just like this relentless,

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Speaker 3: like he himself called himself a son, and he really

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Speaker 3: did have this sort of solar energy that's Kanye West,

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Speaker 3: and he brought it to Adidas, and the sales of

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Speaker 3: the Yeasy would rise and rise, and the profitability were great.

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Speaker 3: But beyond that, he also just kind of created a

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Speaker 3: new energy at the place, I think in credibility for

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Speaker 3: Adidas in the US. So there really was what they

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Speaker 3: call a halo effect for the whole brand.

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Speaker 5: In the same way that Jordan liked Adidas and not

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Speaker 5: Nike and signed with the other one, Kanye West loved

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Speaker 5: Nike not Adidas. So he dropped a couple shoes in

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Speaker 5: the late two thousands and early twenty ten's The Air

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Speaker 5: Yeasy with Nike.

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Speaker 7: Thanks to the new Nike Air Easy with the glow

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Speaker 7: and the dark soul, Jimmy can use this as.

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Speaker 5: A nightlind And the moment he got signed away, it

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Speaker 5: really looked like that Adidas had found something really special.

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Speaker 5: Despite warnings about his behavior and his antics in public,

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Speaker 5: whatever that was, he had something just different in a

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Speaker 5: way to lure people to this product. Every word out

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Speaker 5: of his mouth would be something everyone paid attention to.

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Speaker 5: And this combination of design, product, distribution, operations, and marketing

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Speaker 5: just clicked.

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Speaker 1: And why did he switch? Why did he leave Nike

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Speaker 1: to go to Adidas when he liked Nike so much?

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Speaker 5: He left Nike because he wanted royalties and they would

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Speaker 5: not give him royalties on the shoe. So Adidas gave

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Speaker 5: him an offer that he essentially couldn't refuse. It was

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Speaker 5: more autonomy. He could run his own design studio and

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Speaker 5: work with Adidas instead of for them. The idea behind

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Speaker 5: that partnership was that he would get the freedom that

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Speaker 5: he's so so much desired at Nike.

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Speaker 6: And in the first shoe sold out immediately.

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Speaker 5: The Yeezy Boost three fifties became like the main line

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Speaker 5: for Yeezy's and those things over the years would just

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Speaker 5: constantly sell out and these limited edition drops and then

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Speaker 5: resold on the secondary market for hired than retail prices.

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Speaker 5: It really made this like sneakerhead economy, along with Jordan's,

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Speaker 5: such a big, big thing that it grew into.

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Speaker 1: Can you describe for non sneaker heads among our listeners

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Speaker 1: what these shoes look like, what made them special and distinctive?

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Speaker 5: The three fifties have these nit upper sections and then

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Speaker 5: the Boost technology, which is Adidas's response to Nike's Air

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Speaker 5: on the soul, and they have these ridges on the side.

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Speaker 5: They're comfortable and they just fit with like this kind

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Speaker 5: of street where aesthetic that Kanye helped develop. So beyond that,

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Speaker 5: all these different kinds of easies were sold too. So

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Speaker 5: there's the foam Runner, which looks like this like perforated marshmallow,

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Speaker 5: kind of like a crock.

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Speaker 6: It's a slipper.

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Speaker 5: It's super weird, but ugly doesn't necessarily mean bad in

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Speaker 5: the shoe industry. It means distinctive and if you're wearing those,

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Speaker 5: you know exactly what those are. And his styles over

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Speaker 5: the years really resonated with so many people.

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Speaker 1: After the break, just how much money was Easy worth

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Speaker 1: to Adidas tim how lucrative all told was this deal.

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Speaker 3: It was always a mystery and everyone wanted to know,

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Speaker 3: and you know, drips and drabs of rumors came out

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Speaker 3: or leaks, but no one had a full read on

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Speaker 3: the situation until October, when Adidas terminated the partnership, and

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Speaker 3: so they had to announce what the financial impact of

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Speaker 3: that was going to be, merely for the fact that

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Speaker 3: they weren't going to be able to sell them for

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Speaker 3: the remaining two months of twenty twenty two. And with

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Speaker 3: that little shard of information, analysts kind of reverse engineered

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Speaker 3: the economics of it and quickly determined that the profits

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Speaker 3: were somewhere in the vicinity of forty percent to fifty

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Speaker 3: percent of Adidas's profits from the Easy franchise. So from

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Speaker 3: a revenue perspective, they were only about eight percent of

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Speaker 3: Adidas's revenue, but from a profitability standpoint, they were nearly half.

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Speaker 3: And that just kind of goes to show you that

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Speaker 3: people were willing to pay top dollar for these things.

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Speaker 3: After Adidas canceled the partnership in October, when the Wall

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Speaker 3: Street analysts were parsing the statements and the figures, several

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Speaker 3: of them estimated that the twenty twenty one revenue for

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Speaker 3: Easy was at two billion dollars.

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Speaker 5: The dependence on Eazy's was super interesting. They have so

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Speaker 5: many other product life. They have these old designs of

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Speaker 5: shoes that have stood the test of decades and decades

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Speaker 5: of time, like the Gazelle and the Samba and the

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Speaker 5: Superstar and Stan Smith. These are legendary shoes, right and

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Speaker 5: they've been re releasing them in different styles over the

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Speaker 5: years and years and years. They come in, they come

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Speaker 5: out of style, and at a certain point, product cycles

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Speaker 5: just went out of wax. Things weren't working. They made

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Speaker 5: too many stand Smiths, they couldn't sell them, they couldn't

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Speaker 5: get them off the shelves, and the one left standing

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Speaker 5: was the Easy and that was creating excitement for consumers.

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Speaker 5: It was the one portion of their business that was

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Speaker 5: creating all this excitement. In the first year after Kanye

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Speaker 5: re signed his deal with Adidas, it extended ten years

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Speaker 5: back in twenty sixteen. The first full year after that,

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Speaker 5: Eases did about three hundred million in revenue, and a

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Speaker 5: couple of years later already broke a billion in annual

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Speaker 5: rev It was a big business for them. Beyond that,

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Speaker 5: the shoes themselves were profit drivers. These shoes sell for

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Speaker 5: two hundred dollars retail, and then part of the whole

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Speaker 5: hype cycle that we talk about in the sneaker world

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Speaker 5: is that people aren't just attracted to them because they

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Speaker 5: want to wear them, they want to resell them. So

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Speaker 5: they buy these two hundred dollars sneakers and resell them

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Speaker 5: for two fifty three hundred, four hundred.

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Speaker 6: Some of them go crazy.

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Speaker 5: If you find a pair of the old like Yeezy

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Speaker 5: Duck boots, you can probably sell those for fifteen hundred

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Speaker 5: that kind of thing. The most expensive one ever sold,

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Speaker 5: I believe, was one a prototype version of the Nike

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Speaker 5: Air Yeezys that Kanye himself wore one time, and they

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Speaker 5: they auctioned for like one point eight million.

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Speaker 3: Once Adidas was really gaining momentum last decade, the middle

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Speaker 3: of last decade, everyone had pretty much given up hope

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Speaker 3: on Adidas ever catching Nike in terms of size, at

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Speaker 3: least in the near term. But a lot of investors

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Speaker 3: wanted Adidas to become as profitable as Nike, and so

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Speaker 3: when Adidas decided to go out and get a new CEO,

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Speaker 3: they brought in Casper. Worsted, who's a real operations guy,

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Speaker 3: numbers focused and he had had a really hot streak

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Speaker 3: at the German soap maker Hankle, and so he went

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Speaker 3: about optimizing a bit for the back half of last decade.

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Speaker 3: Everything looked just golden at Adidas, and then the pandemic

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Speaker 3: hit and that's when it was a big turning point

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Speaker 3: for Adidas. First thing that happened was in March, Germany

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Speaker 3: went into lockdown and it emerged that Worsted had not

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Speaker 3: wanted to pay rent in Germany at the Adida stores

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Speaker 3: that were shuttered. This of course caused just rage in Germany.

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Speaker 3: It was front page news and all the tabloids. Then

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Speaker 3: you had the event with the police murder of George

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Speaker 3: Floyd and the protests all over. There were employee protests

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Speaker 3: at Adidas, particularly workers of color who had been complaining

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Speaker 3: that the company did not handle issues, particularly for minority workers,

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Speaker 3: and so that came to a four. So in March

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Speaker 3: of twenty twenty one, Adidas unveiled its new five year

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Speaker 3: strategy called Own the Game, and within two weeks within

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Speaker 3: China boycott started. There was a huge backlash and boycotts

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Speaker 3: of Western brands who had taken a stand against cotton

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Speaker 3: that was sourced in a part of the country where

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Speaker 3: there's a lot of concern about forced labor and other

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Speaker 3: human rights abuses of the Wigers, and it hit Adidas

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Speaker 3: very hard. Adidas had been growing very fast in China,

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Speaker 3: and basically overnight the light switch was turned and that

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Speaker 3: just kind of rocked the whole five year plan that

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Speaker 3: Worsted had intricately come up with. So if we enter

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Speaker 3: twenty twenty two, this is where more headaches come. Russia

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Speaker 3: invades Ukraine. Now Russia is a market that Adidas one

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Speaker 3: of the few countries in the world where Adidas has

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Speaker 3: always clobbered Nike. Overnight, the whole Russia market is gone.

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Speaker 3: And so over the course of last year, Adidas had

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Speaker 3: to put out three or four different profit warnings where

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Speaker 3: they had to lower their financial targets over the course

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Speaker 3: of the year. In the middle of it, the supervisory

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Speaker 3: board finally decided it was time for Casperwarstad to go.

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Speaker 3: They put that out in August. He's going to leave

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Speaker 3: at some point in twenty twenty three. Kanye West or Yea,

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Speaker 3: pours salt in the wound and he posts very what

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Speaker 3: he seems offensive posts on Instagram a fake New York

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Speaker 3: Times front page that said Caspererwiss dead dead at sixty.

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Speaker 3: Within two weeks of that is when Kanye picks up

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Speaker 3: the phone and calls Kim on my colleague here and

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Speaker 3: starts going on a war against all of his corporate partners.

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Speaker 1: As you described, Kim Ye calls you and says he's

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Speaker 1: fed up and wants to cancel the deal with Adidas.

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Speaker 1: But Adidas too wasn't so happy with him either.

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Speaker 5: At first, he wanted to this is a quote from him,

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Speaker 5: He wanted to co parent the sneakers, which means I

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Speaker 5: guess he would design them and they wouldn't deal with

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Speaker 5: each other very much, and Adidas would just sell them.

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Speaker 3: So then October comes, there's the fashion show where he

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Speaker 3: wears shirts that say white lives matter, which the Anti

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Speaker 3: Defamation League regards as hate speech.

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Speaker 2: Tonight a firestorm of controversy for Kanye West because of

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Speaker 2: this photo taken at his Paris fashion show. Yay and

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Speaker 2: conservative commentator Candice Owens war shirts with the phrase white

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Speaker 2: lives matter on the back, a phrase activist say is

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Speaker 2: harmful and has been used by white supremacist groups.

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Speaker 3: And then Kanye starts making these increasingly awful antisemitic remarks.

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Speaker 5: The company put the relationship under review, and that's a

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Speaker 5: process where they're trying to figure out what exactly to

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Speaker 5: do with this enormous business line that suddenly is toxic.

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Speaker 3: Well, they finally did decide in October twenty fifth. By

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Speaker 3: that point, the pressure had just gotten so hot. There

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Speaker 3: were boycotts being called for in the US and in

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Speaker 3: Europe against Adidas products, and it's hard to envision a

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Speaker 3: bigger collection of crises hitting a company all at once.

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Speaker 5: There was a two minute phone call between various members

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Speaker 5: of top management, including Casper Rorstad, the CEO, as they

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Speaker 5: discussed finally what to do about this, And on that

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Speaker 5: day they decided, effective immediately, to sever ties and end

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Speaker 5: the partnership.

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Speaker 1: Why didn't do you just sever that relationship when he

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Speaker 1: started making these anti semitic remarks.

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Speaker 5: A couple other companies that dealt with Kanye and had

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Speaker 5: deals with Kanye did drop him. He had worked with Balenciaga,

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Speaker 5: They said they wouldn't work with him again. He had

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Speaker 5: a big deal with Gap to sell apparel, and Gap

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Speaker 5: started to wind down that partnership quite quickly. Adidas fell

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Speaker 5: under lots of criticism for taking so long to sever

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Speaker 5: their ties with him. They never really did address why

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Speaker 5: they didn't sever that relationship sooner. I think it was

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Speaker 5: mostly about figuring out what to do with all this stuff. Right,

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Speaker 5: there's one point three billion in inventory. You're also trying

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Speaker 5: to figure out how to fill the gaps in your

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Speaker 5: product lines. There's a yeasy sized hole in their product

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Speaker 5: assortment that they need to figure out how to fill.

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Speaker 5: I think, as we've seen, it's taken them seven months

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Speaker 5: to even figure out what to do with the shoes,

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Speaker 5: like these things have been sitting there for so so long.

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Speaker 3: There are no good answers here. I mean, Adidas will say,

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Speaker 3: look compared to those other companies that he had partnerships with,

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Speaker 3: we had the longest running partnership. We had the biggest partnership.

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Speaker 3: We had so many employees, We have contracts with factories

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Speaker 3: in Asia, we have complex dealings. You can't just turn

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Speaker 3: that off overnight.

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Speaker 1: When we come back. Adidas moves ahead without easy How

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Speaker 1: did Kanye respond to being cut off from Adidas?

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Speaker 5: Kanye did not respond super well. There was a day

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Speaker 5: where he went to the Sketcher's headquarters out in California

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Speaker 5: and just barged in there and was like, I want

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Speaker 5: to talk to your executives. It seemed like he didn't

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Speaker 5: think that Adidas would actually end things.

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Speaker 1: Even though he was saying that he wanted to have

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Speaker 1: nothing to do with corporations anymore.

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Speaker 6: He went on a.

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Speaker 5: Podcast and he said, I can say anti Semitic things

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Speaker 5: and Adidas can't drop me. I think he thought he

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Speaker 5: was like so valuable that that company was forever stuck

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Speaker 5: with him, and that co parenting thing that he thought

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Speaker 5: of where he would just do his own thing and

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Speaker 5: the company would sell his stuff and he would still

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Speaker 5: make money off of it. Perhaps that was the arrangement

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Speaker 5: that he wanted long term.

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Speaker 1: I should say that business. We tried to contact ye

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Speaker 1: for comment, but he couldn't be reached. What are they

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Speaker 1: going to do with the shoes?

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Speaker 6: Kim?

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Speaker 5: For the last several months over at Adida's headquarters in Germany,

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Speaker 5: executives have been trying to figure out what to do

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Speaker 5: with this one point three billion worth of shoes, right

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Speaker 5: so they've considered all sorts of things. They thought about

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Speaker 5: removing the Yeasy logo from the shoes and then selling

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Speaker 5: them that way, or they could have donated them to

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Speaker 5: victims of you know, disaster struck countries and things like that.

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Speaker 6: Burning them came up.

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Speaker 5: As well, incinerating all these shoes, as some luxury companies

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Speaker 5: have done in the past with excess merchandise, so that

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Speaker 5: they don't end up out in the world, and like

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Speaker 5: dilute the brand. They thought about chopping them into bits

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Speaker 5: and then turning them into soccer fields, like the turf

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Speaker 5: on a field needs plastic and all this other stuff.

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Speaker 5: But Adidas has decided to sell their remaining easy inventory,

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Speaker 5: and they say they will donate a portion of the

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Speaker 5: proceeds to charities, including the Anti Defamation League.

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Speaker 1: Are people gonna want to buy them?

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Speaker 5: Yeah, that's a big question, right. We don't know if

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Speaker 5: they're going to be put on sale for cheaper. We

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Speaker 5: don't know, you know, in what order all this stuff

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Speaker 5: will be sold. And it's also unclear how long this

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Speaker 5: is going to take them to clear all this inventory,

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Speaker 5: because we're unsure what the demand is.

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Speaker 3: Right.

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Speaker 5: Are we going to be sitting here in twenty twenty

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Speaker 5: six still talking about Adidas with its remaining pile of

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Speaker 5: yeasies that it can't get rid of.

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Speaker 6: I don't know, but we had to Wayne and see.

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Speaker 1: So Tim At the beginning of this year, Adidas got

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Speaker 1: a new CEO and what's his plan to take the

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Speaker 1: company forward? Post yeasy.

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Speaker 3: In January, Adidas broad in Bjorn Gulden, a Norwegian veteran

404
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Speaker 3: of the industry, to be the new CEO.

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Speaker 6: And he didn't have to come from far.

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Speaker 3: Bjorn had spent the last nine years as CEO of Puma,

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Speaker 3: which is located about one mile south of Adidas, also

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Speaker 3: in hertzogn Aurach, and Bjorn is also has Adidas in

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Speaker 3: his blood. He spent the first decade of his career

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Speaker 3: at Adidas in the nineties. People say he knows basically

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Speaker 3: everything about the industry. He's been so immersed in it.

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Speaker 3: So whereas Casper Wrestaid was an outsider who came in,

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Speaker 3: Bjorn like it's flowing through his blood. He immediately appointed

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Speaker 3: himself as the head of global brands.

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Speaker 6: He thinks the company needs to.

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Speaker 3: Be a lot faster, a lot better at managing its

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Speaker 3: product cycle. He's going to have to cook up some

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Speaker 3: new collaborations. So he hasn't put out a new strategy

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Speaker 3: for DTIs. He claims he'll probably do so later this

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Speaker 3: year early next year. But if you had to guess

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Speaker 3: what it is, I would say it's the following a

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Speaker 3: much bigger long term.

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Speaker 6: Focus on results.

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Speaker 3: He's not as obsessed with the quarterly results as his predecessor.

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Speaker 6: He has a much longer term vision.

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Speaker 3: He has gone out of his way to set expectations

427
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Speaker 3: very low from investors. This constant just like punch punch

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Speaker 3: punch of bad news that Adidas investors have endured in the.

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Speaker 6: Last few years.

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Speaker 3: Bjorn basically came in in February and he said, guys,

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Speaker 3: this is a dire picture.

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Speaker 6: That we have.

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Speaker 3: Bear with me, Batten down the hatches. We're gonna fix this.

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Speaker 3: Just give me some time. It's going to take a

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Speaker 3: few years, but we're gonna get there. So some people

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Speaker 3: sold at that point. Those who stayed are Bjorn believers.

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Speaker 3: They've seen his touch at Puma, where he tripled sales

438
00:25:53,760 --> 00:25:58,280
Speaker 3: in nine years. He is a guy who is obsessed

439
00:25:58,280 --> 00:26:01,720
Speaker 3: with sports. He wants Adidas to not be so focused

440
00:26:01,920 --> 00:26:04,280
Speaker 3: on a small number of sports, but he wants to

441
00:26:04,280 --> 00:26:06,960
Speaker 3: see it in every event at the Olympics. He doesn't

442
00:26:06,960 --> 00:26:10,639
Speaker 3: care so much if Adidas is making wrestling shoes or

443
00:26:10,720 --> 00:26:14,760
Speaker 3: ski boots. They may not be the most lucrative of sports.

444
00:26:14,840 --> 00:26:18,360
Speaker 3: But he thinks that as a company that's obsessed with sports,

445
00:26:18,480 --> 00:26:21,119
Speaker 3: as a company that was founded and spent decades as

446
00:26:21,119 --> 00:26:24,720
Speaker 3: the world's biggest sports company, that's the DNA of Adidas.

447
00:26:27,440 --> 00:26:31,160
Speaker 3: And the final thing I would say is he recognizes

448
00:26:31,240 --> 00:26:34,960
Speaker 3: and articulates the difference between Adidas and Nike. People have

449
00:26:34,960 --> 00:26:38,159
Speaker 3: always wondered, why can't it just catch Nike. Bjorn says,

450
00:26:38,359 --> 00:26:41,879
Speaker 3: we shouldn't try, We should just be Adidas. Nike is

451
00:26:41,920 --> 00:26:44,560
Speaker 3: based in the US. Nike look at Air Jordan. Nike

452
00:26:44,640 --> 00:26:48,280
Speaker 3: has the advantage of it can just basically create street

453
00:26:48,280 --> 00:26:51,320
Speaker 3: culture in the US and then export it to around

454
00:26:51,320 --> 00:26:54,200
Speaker 3: the world. Everyone wants to buy the US streetwear. Well,

455
00:26:54,280 --> 00:26:57,360
Speaker 3: Germany doesn't have its own street culture that countries want

456
00:26:57,359 --> 00:27:00,280
Speaker 3: to copy, so Adidas has to do it differently.

457
00:27:01,440 --> 00:27:03,960
Speaker 1: Tim, Tim, thanks so much for coming on the show.

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Speaker 6: You bet of course, thanks for having us.

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Speaker 1: Thanks for listening to us here at the Big Take.

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00:27:10,000 --> 00:27:13,440
Speaker 1: It's a daily podcast from Bloomberg and iHeartRadio. For more

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Speaker 1: shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or

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Speaker 1: wherever you listen, and we'd love to hear from you.

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00:27:19,960 --> 00:27:23,080
Speaker 1: Email us questions or comments to Big Take at Bloomberg

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00:27:23,080 --> 00:27:26,119
Speaker 1: dot Net. The supervising producer of The Big Take is

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00:27:26,240 --> 00:27:30,720
Speaker 1: Vicky Vergalina. Our senior producer is Katherine Fink. Rebecca Shasson

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Speaker 1: is our producer. Our associate producer is Sam Gebauer. Rafael

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00:27:35,000 --> 00:27:38,680
Speaker 1: I'm Seeley is our engineer. Our original music was composed

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00:27:38,680 --> 00:27:42,160
Speaker 1: by Leo Sidrin I'm west Kasova. We'll be back tomorrow

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Speaker 1: with another Big Take