Focus: In the Olympics race, Adidas pursues an edge in new sports. At a time when competitors in the sportswear industry are vying for a position in front of the Olympic Games in Paris in the following year, Adidas is attempting to establish its brand in less competitive sports like breaking, climbing, skateboarding, and BMX.

Following a high-profile disagreement with Ye, the musician formerly known as Kanye West, Adidas discontinued its Yeezy shoe line, which was highly successful. As a result, Adidas CEO Bjorn Gulden is attempting to rebrand the company.

In addition, the Olympics serve as a crucial platform for the world’s largest sportswear companies, which invest millions of dollars in event marketing and sponsorship of individuals, sports federations, and national teams via the Olympics.

Gulden, who took over as CEO of Adidas (ADSGn.DE) at the beginning of 2023, has devised a strategy to turn around the company’s woes. One of the essential components of this strategy is a move back to sports rather than celebrities. This strategy will be put to the test at Paris 2024, which is the company’s most important international event.

“For whatever reason the old strategy here was to focus more deeply on fewer sports, and I’m the opposite, I want Adidas again to be in the smaller sports and to be visible,” stated the president.

The conversation took place at Adidas’ headquarters in Herzogenaurach, Germany, and he continued by saying, “To begin, concentrating solely on the four or five most popular sports is not only too simple, but it is also extremely foolish to tell you the truth.”

Suppose Adidas wants to regain the market share it has lost to competitors over the past four years and reward investors who place their expectations on Gulden. In that case, the Olympics must be as successful as possible.

After two years of losses, the stock of Adidas, the second-largest sportswear firm in terms of worldwide market share, has increased by more than fifty percent so far this year, beating both Nike and Puma with their increases.

According to Gulden, working on more specialized disciplines challenges design teams and provides ideas for more mainstream items like running shoes. This is even though Adidas continues to concentrate primarily on participating in the major Olympic sports, such as athletics.

According to Gulden, breaking, which has its roots in hip-hop, is also attracted to streetwear and lifestyle. Additionally, it provides a chance to reach new audiences in crucial areas like China, where the most recent Olympic sport is popular.

In June, Adidas hired the Chinese athlete Liu Qingyi, known as “B-Girl 671.” She is the world’s current number-one female breaker, but the competition is fierce.

Nike is the official sponsor of the breaking federations of the United States, Japan, and Korea, and the company has informed Reuters that it has contracted twenty athletes. In addition, Puma has only recently signed Qi Xiangyu, a Chinese athlete.

PERFORMANCE

Additionally, climbing, skateboarding, and BMX freestyle, all of which had their Olympic debuts in Tokyo in 2021, will be featured in Paris as part of an effort to entice younger people to participate in the Games.

The Olympic Games aid businesses in building a reputation for the “performance” goods that elite athletes use. Although it is impossible to quantify how much the Olympics promote sportswear sales, the Games help brands build a reputation.

Kieran Reilly, a BMX rider, the Brazilian Skateboarding Federation, and the Polish Olympic Committee are among the athletes Adidas officially signed this year. However, Gulden has stated that the company’s involvement in Paris will not be as extensive as he would have liked it to be because sponsorship contracts for the Olympics often last several years.

“The Olympics are important for these brands in terms of showing their technology in every sport,” said Boris Radondy, who invests in sports firms at French asset management DNCA. “The purpose of the Olympics is to showcase their technology.”

“The customer leaves when these brands forget that they are a sports brand,” the author writes. He continued by saying, “You can’t be the only lifestyle.”

With the signing of Usain Bolt when he was just 16 years old, Puma is concentrating its efforts primarily on the athletics industry, where it has previously made considerable investments as the official sponsor of the Jamaica Olympic Association.

“We still need to focus on gaining market share in these areas,” Richard Teyssier, the worldwide brand and marketing director for Puma, said in an interview with Reuters.

Thirty-five new athletes were signed by Puma this year throughout various track and field events, ranging from the javelin and long jump to the 10,000-foot.

“It is very important for them to be exposed in track and field,” said Radondy, whose fund has Puma shares. “In the past, they have selected the best athletes,” Radondy added of the athletes they have chosen.

Puma’s revenues are almost three times smaller than Adidas’s, which means that Adidas can afford to spend more money on more athletes and sports at the Olympics. In turn, Nike can significantly outspend Adidas.

Kerryn Foster, the head of specialty sports at Adidas, stated that “we continue to invest more and more in the Olympics as a company, not just in the event but in the lead-up.”

For the stockholders who have put their faith in Gulden, the expectation is that his new strategy for Adidas will be successful in delivering gold.