Key Takeaways

  • Adidas said in a press release Thursday that former executive Birgit Kretschmer will replace Harm Ohlmeyer, who has served as chief financial officer since 2017. Kretschmer will take on the role at the "end of the year" and join the company's executive board in September.
  • The sportswear and footwear giant said Kretschmer most recently served as CFO of vertical retailer C&A, and previously spent 25 years at Adidas in various senior finance roles, including CFO of adidas Internal BV, CFO for Western Europe, and Senior Vice President of Corporate and Operations Finance.
  • Adidas CEO Bjørn Gulden praised Ohlmeyer for his contributions to building the e-commerce business and selling the TaylorMade golf and Reebok sportswear businesses, and welcomed Kretschmer's return. "Having worked for Adidas for 25 years and then serving as CFO at C&A for six years makes her the ideal candidate for the future CFO role," Gulden said in a statement in the press release.

Deep Dive

Shares in the Germany-based company fell about 11.5% Thursday after it announced the leadership change and reported second-quarter earnings. According to The Wall Street Journal, its profit was weighed down by aggressive marketing spending tied to the FIFA World Cup.

The company said second-quarter operating profit rose 5% to 574 million euros ($662 million), despite higher marketing investments in World Cup promotions. Net profit from continuing operations rose 6% to 398 million euros.

Although Kretschmer is a "well-known and credible executive" in Germany, the stock decline may partly reflect investor disappointment with the choice and a desire to see a leader who better represents change, said Shawn Cole, president and co-founder of executive search firm Cowen Partners.

"The appointment seems to signal stability and familiarity," Cole said in an email. "Operationally, that may not be a bad decision, but it may not be the signal growth-oriented investors wanted to hear."

Adidas's CFO choice contrasts sharply with rival Nike's selection last month. The Beaverton, Oregon-based sportswear company named Dave Denton, currently CFO of Pfizer, as its next finance chief, effective next month.

Adidas is in the final stages of a four-year turnaround led by Gulden, according to an April report by David Swartz, senior equity analyst at Morningstar. Swartz wrote that Adidas, like its traditional brand peer Nike, faces competitive pressure from emerging brands that are gaining favor with consumers.

"Consumers are responding positively to innovative products from both established and newer sportswear companies. Industry trends shift quickly, putting significant pressure on producers like Adidas to keep pace," Swartz wrote.

Thursday, Swartz told CFO Dive the stock can be volatile and it is not entirely clear what caused the decline, but he said part of it may be concerns about World Cup spending. "Adidas got a big boost from the World Cup, but it was expensive and may not translate into large-scale footwear sales," Swartz said.

Cole told CFO Dive that as the pool of qualified successors shrinks and leadership pipelines face pressure, companies are increasingly bringing back veterans for senior roles. He also expects this to happen more as a wave of executive retirements is projected to peak between 2029 and 2034.

"As the pool of proven lateral CFO talent contracts, companies will increasingly turn to former executives," he said, noting there are advantages to doing so, although veterans are less likely to challenge the status quo.

"Returning executives already understand the business, culture, systems, and key stakeholders, and can often hit the ground running faster than an external hire," Cole said. "Boards also have direct evidence of how the person works, rather than relying entirely on interviews, references, and reputation."

There have been several recent cases of so-called "boomerang" executives returning to former employers. In May, Amgen announced it was rehiring Thomas Dittrich as CFO; in June, Comcast said its former CFO Michael Angelakis would return to the Philadelphia-based company as CEO, CFO Dive previously reported.

Adidas did not immediately respond to a request for comment.