Adidas to Invest More than $1.2 Billion into Digital Transformation
Adidas plans to push sustainability and boost online sales by investing in digital technology. The German sportswear company’s latest efforts to double their e-commerce sales by 2025 are part of a digital arms race against Nike, its main competitor.
On Wednesday, the sportswear company indicated it was predicting overall 2021 sales growth at a rate in the mid-to-high teens. This rate is expected to rise by 30% in China, the remainder of Asia, and Latin America.
Reuters reported that this announcement led to a 3.2% increase in Adidas shares on Wednesday, the largest gain on the German blue-chip index.
During the pandemic, Adidas was financially impacted by store closures, turning its focus to digital sales. Online sales increased over the past year with more people at home investing in sportswear for exercise activities.
Investing in digital transformation is expected to help Adidias create a more agile supply chain that can deliver faster and improve online ordering experiences. Adidas CEO Kasper Rorsted predicts more than 40% of the company’s profits by 2025 will come from e-commerce sales.
A shift to sustainable products is another emphasis of the company’s new digital direction. Adidas plans to manufacture 90% of its products with sustainable materials by 2025. The Stan Smith tennis shoe launching later this year is one of the first examples of the company’s new commitment to sustainable practices. This footwear product will have a version made from a mushroom-based faux-leather.
Adidas also plans to grow e-commerce sales by focusing on women’s products. Its new partnership with Peloton — an exercise bike manufacturer and workout subscription services — is expected to draw in more female buyers.
The company expects sales to rise by 8% – 10% per year and net profit is expected to grow by 16% – 18% per year. Adidas is targeting online sales of $10.71 billion by 2025.
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