Adidas (OTCMKTS: ADDYY) – shifting headquarters

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By Ross Schwartz on September 29, 2014 Street Watch

The rivalry between Nike (NYSE:NKE) and Adidas (OTCMKTS:ADDYY) has been going on for decades now. The German multinational has faced many tactics by Nike (NYSE:NKE) to get ahead in the game. Now, Adidas (OTCMKTS:ADDYY) is getting ready with its own agenda for which it needs expert opinion and world-class designers help.

It has been a challenge for Adidas (OTCMKTS:ADDYY) to shift headquarters to rural Germany – the company knows that it is extremely difficult to pack up and move headquarters to Herzoggenaurach near Bavaria. However, it does need to get its act together considering it is losing its market share to Nike (NYSE:NKE); which has had much better consumer surveys and earnings that were better than estimates.

The German brand aims to counter Nike’s (NYSE:NKE) success by targeting the U.S. market with its new designs and by investing capital in its facilities in the founding town, Bavaria.

Employer branding as well as digital recruiter expert, Steve Fogarty stated that a lot of talent is required by the company and it needs to create an environment that will bring them in.

Fogarty further said that many designers like to go to high profile places like Amsterdam, London and Berlin thus making it difficult to get them to stay in Germany’s center.

Recently, Paul Gaudio was promoted as global creative director of Adidas (OTCMKTS:ADDYY) by Eric Liedtke who was made in charge of global brands back in March. Gaudio was moved from Herzo to Portland in order to help turn around the German company’s luck. The company houses about 1,000 staff members in Portland while Nike (NYSE:NKE) stands with a powerful workforce of over 8,500 in the same area.

Initiatives are being taken by Gaudio to help the company to get ahead of its competition. He announced on Wednesday that the company will also open its relatively smaller creative studio in Brooklyn next year. He also reported that it will be run by three young designers that previously worked for Nike (NYSE:NKE) and were poached by him.

With shares down by quite a margin this year, the company is doing its best to get back in the game. Adidas (OTCMKTS:ADDYY) blamed its poor performance on its golf business especially in the North American region.

The company’s chief executive Herbert Hainer, has been loyal to the company ever since his joining. Being a native of the town of Bavaria himself he feels proud to be associated with a region that takes a lot of pride in its economy and is home to companies like Audi (NASDAQ:AUDC), BMW (ETR: BMW), Allianz (ETR: ALV), Munich Re (BIT: MUV2) and Siemens (OTCMKTS: SIEGY).

There are around 3,900 staff members of Adidas (OTCMKTS:ADDYY) that work in Herzo; the total count it 52,500; out of this Herzo number almost a third of them are from outside of Germany. Hainer said last month that Adidas (OTCMKTS:ADDYY) plans on adding 100-150 new members to its team at the headquarters annually.

Adidas (OTCMKTS:ADDYY)’s trading value is 17 times than its expected earnings; whereas Nike (NYSE:NKE)’s and Amour (LON: AMR)’s values are 22.5 and 58 times respectively.