Adidas Group AG

International Directory of Company Histories, Volume 75 (2004) by Dave Mote, Mariko Fujinaka, M. Cohen

adidas Group AG

Adidas Group AG

Adi-Dassler-Strasse 1-2 91074 Herzogenaurach Germany Telephone: 49-9132-842471 Fax: 49-9132-843127 Web site: http://www.adidas.com

Public Company Incorporated: 1949 Employees: 14,254 Sales: EUR 6.48 billion (2004) Stock Exchanges: Frankfurt Ticker Symbol: ADDDY NAIC: 315211 Men's and Boys' Cut and Sew Apparel Contractors; 315212 Women's, Girls', and Infants' Cut and Sew Apparel Contractors; 315299 All Other Cut and Sew Apparel Manufacturing; 339920 Sporting and Athletic Goods Manufacturing; 316211 Rubber and Plastics Footwear Manufacturing; 316219 Other Footwear Manufacturing

Germany-based adidas Group AG, the world's number two sports footwear and apparel company, is going for the gold. In 2005, the company announced that it had reached a merger agreement with Reebok International Inc., the world's number three sports footwear and apparel brand. The resulting company will post revenues of more than $9.5 billion, creating a true rival to the world's dominant brand in the industry, Nike ($12.5 billion in revenues in 2005). The merger also represents adidas's decision to shift its focus more directly onto its core footwear and apparel operations. In October 2005, as part of that effort, the company completed the sale of its Salomon winter sports division, acquired in 1997, to Finland's Amer Sports Corporation. Included in that sale were the company's Mavic bicycle division, and other brands, including Arc'Teryx, Bonfire and Cliché. Nonetheless, adidas has kept its golf equipment, footwear and apparel division, TaylorMade-adidas, as well as its Maxfli line of golf balls, golf clubs, and accessories. A globally operating company, with some 110 subsidiaries worldwide, adidas has targeted China as a key growth market; the company has fought hard to become an official sponsor and supplier to that country's Olympic Games in 2008. In this way, the company hopes to position itself as the brand of choice as the Chinese market shifts from merely manufacturing the world's sports shoes to becoming the world's largest consumer sports footwear market. adidas remains listed on the Frankfurt Stock Exchange and is led by CEO Herbert Hainer.

Humble Beginnings for the Athletic Shoe: 1920s–40s

adidas emanated from a bitter dispute between two brothers, Rudolph and Adi Dassler, in the small Bavarian mill town of Herzogenaurach. Rudi and Adi were born in 1898 and 1900, respectively, to Christolf and Pauline Dassler. Their hometown of Herzogenaurach was a regional textile manufacturing center at the time, but during the early 1900s most of the mills converted to shoemaking. Adi was trained to be a baker, but those skills offered him little hope of finding a job in the final years of World War I. Instead, the Dassler family started a tiny shoemaking business in the back of Pauline's laundry. Adi began making shoes using materials from old helmets, tires, rucksacks, and other refuse that he could scavenge. Adi's sister cut patterns out of canvas, and the always innovative Adi built a shoe trimmer that was powered by a bicycle.

The company's first shoes were bedroom slippers that sported soles made from used tires. Adi, who had a lifelong love of sports, converted those slippers into unique lightweight gymnastics and soccer shoes with nailed-on cleats. Demand for those shoes allowed the family to build a factory in 1926, when output rose to about 100 pairs per day. Adi's brother and father both quit their jobs to work in the company.

The Dassler family's company received a major boost when their shoes were worn by German athletes in the 1928 Olympics in Amsterdam. Four years later, moreover, athletes clad in Dassler shoes won medals in the Olympics in Los Angeles. Then, in the 1936 Games, the world-renowned American sprinter Jesse Owens raced to victory in Dassler shoes. Owens's shoes featured two widely spaced stripes that wrapped over the ball of the foot, a design that became increasingly commonplace on the feet of athletes around the world.

After the soldiers left, Rudi returned to Herzogenaurach and rejoined his brother. He had spent several years fighting and one year interned in an American prisoner-of-war camp. Just as they had been forced to do after World War I, Adi and Rudi scavenged for shoemaking material to rebuild their business in wartorn Germany. They used army tents for canvas and old American tank materials for soles. They paid their 47 workers with such materials as firewood and yarn.

Sibling Rivalry and the Birth of adidas: Late 1940s

It was only a few years after Rudi's return that an infamous dispute broke out between the two brothers. Although the men kept the impetus for the fight a secret until their deaths, rumors swirled that the battle stemmed from disagreements related to the war. One story indicated that Rudi was upset that Adi had not used his connections with the Allies to get him out of the prison camp during the conflict. Whatever the reason for the feud, Rudi walked away from the family home and business forever in the spring of 1948, intent on starting his own shoe business. He took with him the company's sales force and control of a building that was to become a new factory. Adi kept most of the workforce and the original headquarters offices and factory. From that time forward, the brothers never spoke a word to one another except in court. The businesses that they created represented one of the most intense rivalries in all of Europe.