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Adidas outlines turnaround plan

Article By: ,  Financial Analyst
March 27, 2015 11:26 AM

Adidas is aiming to move some of its production to Europe from Asia as part of the company's turnaround plan.

The decision has been taken to allow shoppers to customise more shoes and clothes and generally speed up the process of manufacture and delivery. It is part of Adidas' long-term goal of accelerating sales and profit growth over the next five years and regain some of the lost ground on US rival Nike.

As part of the plans Adidas said that it was testing automated production units that would allow it to move certain operations from Asia closer to consumers. This would allow the company to react quicker to fast changing trends as it looks to challenge the market domination of Nike. It also wants to take on fashion retailers like H&M, which is already responsive and is making strides into the sportswear market.

Herbert Hainer, Adidas chief executive, explained the company's current long-term plans: "We will bring production back to where the main markets are. Robots can be everywhere."

Eric Liedtke, the German manufacturer's global brand chief, added that the firm was looking to revolutionise the market akin to Nike when it moved production to Asia in the 1980s. Adidas expects sales to grow to over €22 billion (£16 billion) by 2020 with net income rising 15 per cent per year on average.

Landmark football deals

Adidas signed a landmark deal with Manchester United in July 2014. The agreement would be the German company pay £750 million to make the former Premier League champions' kit for the next ten years, starting from the 2015/16 season. The deal was reached after current manufacturer Nike decided to end its association with the English club.

The Adidas deal represented a world record-breaking £75 million, dwarfing the previous highest of £31 million-a-year paid to Spanish giants Real Madrid.

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