BERLIN – Adidas issue an apology on Wednesday after drawing widespread criticism over its plans to take advantage of Germany’s new eviction freeze to avoid paying April rents, in a case that has highlighted the reputational risks to companies during the coronavirus crisis.
Senior German politicians, including the country’s justice, transport and employment ministers, said the sportswear giant should be financially stable enough to pay its rent, even as it weathers the COVID-19 impact.
In an open letter, addressed to “dear readers,” the company, whose net income was 1.91 billion euros last year, said that it had paid April rents after all.
“We made a mistake and we lost a lot of trust by doing so,” Adidas said. “It might take some time to win that trust back. But we will do everything to make that happen.”
But the firm also said that despite its size, it was struggling to weather the impact of the pandemic and might need to access credit at some stage.
For now, after talks with labor representatives, Adidas had agreed to implement a federal short-time work scheme. The German government has used this mechanism in the past, most notably during the 2008 financial crisis, to save jobs.
Under the scheme, employers pay around 40 percent of staff salaries while the government tops this up with the other 60 percent. Staff end up with around three-quarters of their normal salary even though they may not be working full-time.
This month, almost half a million German workers applied for the scheme and up to 2.15 million are expected to apply over coming months. Besides Adidas, that includes staff from large German companies like Lufthansa and Volkswagen.
Adidas also wrote in their apology letter that they are supporting the World Health Organization’s COVID-19 Solidarity Response Fund, have sent medical supplies to China and have also commissioned production partners to produce face masks for healthcare staff.
Additionally, senior managers, including chief executive officer Kasper Rorsted, are taking a voluntary pay cut of between a third and a half. In Rorsted’s case, that was 80,000 euros. The company also canceled a planned share buyback.