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The Daily Grind

What Can Adidas Learn from J.C. Penney?

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Photo by Chris Ratliffe/Bloomberg News

Kasper Rorsted will take control of Adidas in October, and the company is looking to him to lead the brand back to its former glory. Although the company reported solid net profits in 2015 that were markedly better than previous years, Adidas has lost market share. Behind Nike and Under Armour, the brand fell to third place in North America last year. Rorsted comes to Adidas from Henkel, a German consumer products company, where he spent eight years. Henkel stocks tripled, and profit and sales improved during his tenure.

Rorsted’s success in Germany is attributed to his American leadership style, which has been described as “competitive” and “American” by analysts and investors. He has a wealth of experience stateside, with previous positions at Compaq and Hewlett-Packard as well as monthly visits here during his time at Henkel. Part of his approach to achieving success was shaking up old hierarchies and reinvigorating the older brand’s mentality. Investors hope he will bring this strategy to Adidas.

If Rorsted is looking to make this classic brand relevant again, perhaps he can look to someone who is in the midst of doing just that. Marvin Ellison recently became CEO of J.C. Penney and started making changes from the ground up to save the dying retailer. Some of his first changes were to simply rearrange the sections of J.C. Penney stores, like moving women’s accessories near women’s clothes and men’s shoes near men’s clothes. Ellison also brought new energy to Penney as Rorsted did to Henkel. He identified miscommunication and gaps in understanding between senior management and store staff. These disconnects resulted in inventory shortages and therefore lost opportunities for profit.

Ellison gained his inventory management experience from Home Depot, where he engineered the company’s store and e-commerce integration and improving their supply chain. He brought his previous track record of turning around a suffering chain to Penney, and the company reported a 4.1 percent gain in same-store sales in its most recent earnings report. Penney also surprisingly gained market share at the expense of rivals like Walmart and Target. Although they have experienced success under Ellison’s leadership, they still posted a net loss of $131 million in the latest quarter.

If Rorsted can apply his leadership style and practical experience he gained at Henkel to Adidas, just as Ellison did from Home Depot to J.C. Penney, then Adidas could be poised for a market share increase.

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