Former managers felt vindicated when Adidas ended its lucrative partnership with Kanye West in October, following a global outcry over his anti-Semitic remarks.
Top executives had been warning for years that the German sportswear conglomerate was overly reliant on the Yeezy sneakers franchise it ran with the US rapper and fashion designer known as Ye.
"Behind the scenes, things had been bad for a long time with Ye," one former manager told the Financial Times. "He was constantly misbehaving — changing his mind, delaying projects, failing to meet Adidas deadlines."
Adidas was founded in 1949 by Adolf "Adi" Dassler, whose brother Rudolf founded Puma the same year, and has since grown to become the world's second-largest sportswear company, trailing only Nike.
However, when long-serving Puma CEO Björn Gulden takes over as CEO of Adidas next month, he will inherit a company in crisis from Kasper Rrsted.
Ye's departure, which coincided with the company's third profit warning in four months, came on the heels of two other surprises: a drop in sales in China and its withdrawal from Russia, another important Adidas market.
"In one year, we lost three profit pools," said one senior manager.
Meanwhile, some Adidas alumni claim that poor decision-making and a toxic leadership culture have exacerbated the company's problems.
In interviews with 17 current and former executives, many of those who have left the company said Rorsted and his board had positioned Adidas poorly to weather the storm, firing key personnel and becoming over-reliant on the Yeezy cash cow. They also claimed the outgoing chief’s “management by fear” had traumatised staff and led to an exodus of talent.
Most remaining employees, however, defended Rrsted's tenure, blaming the problems on unprecedented external shocks. Rrsted refused to comment.
The passing of the baton
Adidas shares jumped 20% on the day Gulden, a 57-year-old Norwegian former professional footballer who engineered a spectacular turnaround at Puma, was appointed.
But, with the stock still trading at a six-year low, far below its peak during the pandemic, he is taking over one of Europe's worst-performing blue-chip companies.
"A complete Adidas brand reset is most likely required," Citi analyst Thomas Chauvet wrote in a client note last month.
According to people familiar with the supervisory board's thinking, it was partly Puma's performance that cost Rrsted his job. Puma and Nike shares have significantly outperformed Adidas since the outbreak began.
