Dive Brief:

• Adidas is bringing back alum Birgit Kretschmer to succeed longtime CFO Harm Ohlmeyer, who is stepping down from the seat he’s held since 2017, according to a company press release Thursday. Kretschmer will take the finance reins “at the end of the year” and join the company’s executive board in September.
• The sports apparel and footwear giant said Kretschmer, most recently CFO of vertical retailer C&A, previously served in a wide range of senior finance roles over 25 years with Adidas, including as CFO of adidas Internal BV, CFO of Western Europe, and SVP of corporate and operations finance.
• Adidas CEO Bjørn Gulden credited Ohlmeyer with building up its e-commerce business as well as his work on selling the company’s TaylorMade golf and Reebok sportswear businesses, and welcomed Kretschmer back. “Having worked 25 years with adidas before and now six years as the CFO at C&A makes her the perfect CFO for the future,” Gulden said in a statement in the release.

Dive Insight:

Shares of the Germany-based company fell about 11.5% Thursday as the company announced the leadership shakeup and reported second quarter earnings. Its earnings were dinged by the company’s aggressive marketing spending on the FIFA World Cup, The Wall Street Journal reported.   

The company said its Q2 operating profit rose 5% to €574 million ($662 million), despite higher marketing investments into World Cup promotional campaigns. The company’s net income from continuing operations rose 6% to €398 million.  

While Kretschmer is a “known and credible executive” in Germany, the stock’s drop may partly reflect investor disappointment in the choice and a desire for a leader who signaled more change, said Shawn Cole, president and co-founder of Cowen Partners Executive Search.

“The appointment appears to communicate stability and familiarity,” Cole said in an email. “That is not necessarily a bad decision operationally, but it may not be the message growth oriented investors wanted to hear.”   

The Adidas CFO pick is very different than that made by competitor Nike last month. That Beaverton, Oregon-based sportswear company appointed Dave Denton, currently Pfizer’s CFO, to serve as its next finance chief starting next month. 

Adidas is in the final stages of a four-year turn around led by Gulden, according to an April Morningstar report by senior equity analyst David Swartz. Like its fellow legacy brand Nike, Swartz wrote Adidas is also under pressure to compete with new names that consumers are embracing.   

“Consumers have responded to innovative products from both established and new sportswear firms. Industry trends come and go at a rapid pace, putting great pressure on producers like Adidas to keep up,” Swartz wrote. 

On Thursday, Swartz told CFO Dive that the stock can be volatile and that it wasn’t altogether clear why it fell, though he said part of the reason could have been concern about World Cup spending. “Adidas got this big boost from the World Cup but it was very costly and maybe it’s not going to translate into big footwear sales,” Swartz said. 

It is increasingly common for companies to bring back veterans to serve in senior roles as the leadership pipeline is under pressure amid a shrinking pool of qualified successors, Cole told CFO Dive. He also expects to see more of it as a wave of executive retirements are expected 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 that there are advantages to doing so, even as veterans are less likely to challenge the status quo. 

“A returning executive already understands the business, culture, systems, and key stakeholders and can typically become effective more quickly than an external hire,” Cole said. “The board also has direct evidence of how that person operates, rather than relying entirely on interviews, references, and reputation.”

There have been a number of recent instances of so-called “boomerang” executives returning to their former employers. In May, Amgen announced it was hiring back Thomas Dittrich as CFO and in June Comcast said its former CFO, Michael Angelakis, was rejoining the Philadelphia-based company to step in as its CEO, CFO Dive previously reported. 

Adidas did not immediately respond to a request for comment.