Adidas' Restructuring: A Necessary Move or a Risky Gamble?

Adidas, the world's second-largest sportswear maker, is set to axe up to 500 jobs at its headquarters in Herzogenaurach, Germany, according to a source who took part in a meeting where the figure was announced. The company, which employs around 5,800 people in the Bavarian town, plans to simplify its complex structure and improve decision-making processes (Manager Magazin, 2025-01-23).

The job cuts, which account for around 8.6% of the total workforce at the headquarters, are part of a broader strategic review and restructuring effort aimed at streamlining Adidas' operations and focusing on core competencies. The company is undergoing significant changes behind the scenes, with CEO Bjorn Gulden reviewing almost all aspects of the business (WALL STREET JOURNAL, 1/22). The decision to cut jobs is expected to help Adidas get back on a growth track and tackle the challenges and opportunities in the rapidly evolving sportswear market.

Adidas' preliminary results for the fourth quarter of 2024 and the full year 2024 demonstrate the company's commitment to its long-term growth plans. In Q4, currency-neutral revenues increased 19%, and the gross margin increased 5.2 percentage points to 49.8%. For the full year, currency-neutral revenues were up 12%, and the gross margin improved by 3.3 percentage points to 50.8%. Operating profit reached €57 million in the quarter and increased by more than €1 billion to €1,337 million for the full year (adidas, 2025).

The job cuts are expected to have a significant impact on Adidas' organizational structure and decision-making processes. By streamlining the company's structure, Gulden aims to make the organization more agile and responsive to market demands, enabling faster decision-making and go-to-market processes (The Business of Fashion, 2024-10). The job cuts may also influence Adidas' product development and marketing strategies, allowing the company to better capitalize on emerging trends and consumer preferences.

However, the restructuring also presents potential risks and challenges for Adidas. The job cuts could lead to a loss of institutional knowledge and potential talent drain, which could negatively impact the company's ability to innovate and execute on its strategies. The restructuring could also cause temporary disruption to Adidas' operations, which could negatively impact short-term earnings. Additionally, the uncertainty surrounding the restructuring and job cuts could negatively impact employee morale and productivity, which could also affect short-term earnings.

In conclusion, Adidas' decision to cut up to 500 jobs at its headquarters is a crucial step in its long-term growth plans, enabling the company to invest in its people, brand, and digital transformation while focusing on core competencies and simplifying its structures. However, the restructuring also presents potential risks and challenges that could negatively impact short-term earnings and market perception. It will be crucial for Adidas to manage the restructuring process effectively to mitigate the risks and capitalize on the potential benefits.