Bad news for employees at shoe and athletic wear giant Adidas (ADDYY), as word emerged about substantial layoff plans to hit the company’s headquarters in Germany. The word about new job cuts did just what it usually does for a company, though not in the scale some might have liked. Shares were up fractionally in Thursday afternoon’s trading.
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The report direct from CEO Bjoern Gulden notes that Adidas will be cutting around 500 jobs at the Herzogenaurach facility in Germany. Percentage-wise, that is not so bad; Adidas employs about 5,800 people in that town anyway, so the cut is not even 10% of the total. But for the 500 people about to lose jobs, it is a heartbreaking blow.
The reason? The biggest reason was an issue of corporate complexity. Rather, the company structure was “…too complex in a constantly-changing world.” Gulden has been working to decentralize operations for the last few years now, the report noted, though his focus has mainly been one of growth rather than addressing “personnel issues.”
Growth Achieved…Now Get Out.
That makes this latest development all the more interesting. Gulden wanted to get the company back on a “growth track,” reports noted, but word from the company itself suggests that it is well on its way. In fact, Adidas rolled out its preliminary results for 2024’s fourth quarter earlier this week. The fourth quarter featured a 19% jump in revenues on a currency-neutral basis.
For the full year 2024, meanwhile, currency-neutral revenues were up 12%. When Yeezy sales are left out of the picture, things actually improved 13% over this time last year. This suggests that, perhaps, Adidas considers itself sufficiently on that “growth track” that it can start addressing “personnel issues.”
Is Adidas a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ADDYY stock based on one Buy assigned in the past three months, as indicated by the graphic below. After a 49.15% rally in its share price over the past year, the average ADDYY price target of $162.90 per share implies 20.5% upside potential.
