adidas AG (PNK:ADDYY) Q1 2023 Earnings Call Transcript

At the same time, we had huge running franchises through the history and started with maybe the flux. We had the NMD, which was fantastic. We had the beginning of the UltraBOOST. And right now, that’s where the shoe is not doing that well. And in general, there’s very few running franchises out there that goes lifestyle. Ironically, it is brands like ON and HOKA coming in from the performance side and certainly those lifestyle. And I’m not sure that I’d be last long, but of course, we need to make sure that we very quickly are having an answer to that, and that’s what we’re working on. So again, we have all the ingredients to have franchises that we can scale up to 20 million pairs, but we need to make sure we do it in a proper way and then not oversupply so we start to discount again.

And this is the test that we are now going through because now we have this energy in certain of them, and now, we need to scale, but scale it in a way that we can actually keep them for a long time. At the same time, exploit the look also in the down channel. We take down version that we can then sell in the family channel and that’s how you make the franchise profitable, and that’s what we’re trying to do.

Operator: Our last question for today comes from Warwick Okines from BNP.

Warwick Okines: On the last call, you talked about the changes you’ve made to the Executive Board. And today, you talked about EMEA management. Could you give us an insight about how much change is taking place further down the organization? And secondly, could you give us some feeling of what you think the shape of revenue will be this year? Obviously, you’re flat in Q1 and you’re still guiding for high single-digit declines. Is Q2 the low point, do you think?

Bjorn Gulden: We did the two changes in the Board that you know. We changed Roland after 33 years with Arthur and that was, of course, necessary to do the changes we need to do on the commercial side. And then I took the brand side away from Brian, again, necessary to get the speed of all the creative environments so they can go straight to me, which is important in the change. And then when you go down in the organization, of course, there’s many changes in people that you don’t see, and there’s quite some changes in the way we are trying to go to market. We’re trying to open up the campus, have more samples in the showrooms, have much more accounts coming to our headquarter. We are changing calendars to be quicker in the way we develop products, and we are trying to be more local.

So we give more autonomy to the markets to also utilize the engines in the markets they sit. So there’s quite some changes going on between beginning of January and now when it gets to the product cycle. Difficult to quantify when it gets to people, but there are rules being changed, and there will always be changes because that’s the way our business is. When it gets to…

Sebastian Steffen: Revenue development.