Adidas Back in the game the venerable German shoemaker has pulled its financial socks up. Now it's scoring some points in the U.S. market.

Charles P. Wallace

There isn't a Swoosh in sight. As a couple of hundred college coaches watch an exhibition game from wooden bleachers, the cream of American high school basketball prays for a smile or a nod. Sonny Vaccaro, the promoter who discovered Michael Jordan for Nike, works the floor like a politician. But instead of Nike's ubiquitous trademark, the three-stripe logo of Adidas, Germany's venerable sporting goods company and sponsor of this event, flutters from the rafters like a Teutonic battle flag. "Does Phil Knight want me dead?" crows Vaccaro, referring to Nike's billionaire chairman. "You bet."

Outflanking Nike with high school basketball summer camp might seem like a small skirmish in the multibillion-dollar global sneaker war, but it's part of a broad assault being mapped for Adidas by President Robert Louis-Dreyfus, the perpetually rumpled French financier who has engineered an impressive turnaround at the German shoemaker. Adidas has become that rare case study: a former market leader that's regaining its footing, after being all but crushed by an upstart rival like Nike. It's as if Apple Computer came back to challenge Compaq.

In a scant five years, Adidas has pulled back from the brink of bankruptcy, gone public, and seen its stock price triple. Its revenue jumped from $1.7 billion in 1992 to $2.8 billion in 1996. Earnings per share rose 28% last year, and company officials insist that profits will keep expanding at a similar rate for at least three years more. Adidas has slimmed down its management ranks, moved manufacturing out of costly European plants, and undertaken a huge increase in spending on marketing. The 51-year-old Louis-Dreyfus, a sports fanatic with a Harvard MBA, has turned his $10,000 initial investment in Adidas into a prodigious personal fortune of some $390 million.

Now, having cleaned up the company's balance sheet (its debt will be paid down entirely in a couple of years), Louis-Dreyfus is pressing his U.S. executives to boost the company's performance in the all-important American market. They have a long way to go: Adidas still commands only 5% of the athletic shoe business in the U.S., compared with 40% for the fearsome Nike and 16% for Reebok International. But thanks to new blood like former Nike basketball chief Vaccaro--and some other talented apostates from that firm--Adidas is back on the playing field. Its logo is turning up once again on the shoes (and T-shirts and sweats) of American kids. Last summer it signed a $10 million promotional deal with Kobe Bryant, a teenage prodigy making his NBA debut. Then, a few months later, it trumped Nike with a $100 million agreement under which baseball's New York Yankees will wear the Adidas logo.

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