Adidas Extends Winning Streak
April 27 2016 - 5:30AM
Dow Jones News
FRANKFURT—Adidas AG's return to form continued Wednesday as it
raised its guidance for 2016 for the second time in three months on
a leap in earnings.
The world's second-largest sporting-goods company, after Nike
Inc., recorded a 38% rise in net profit to €350 million ($394.9
million), beating analyst expectations. Revenue increased 17% when
adjusted for currency effects.
Adidas said it now expects currency-adjusted sales in 2016 to
grow at a rate of about 15% and net profit at between 15% and
18%.
The company's shares were up 6.4% Wednesday morning, leading the
gainers on the Frankfurt blue-chip index.
The German sportswear maker has been enjoying stellar momentum
recently. In December, departing Chief Executive Herbert Hainer
said he expected 2016 to be a record year for the company.
The recent good news has come at a convenient time for Mr.
Hainer, who is set to leave Adidas in October after 15 years at the
helm.
About a year ago, his situation was quite different.
Due to currency losses in Russia, a general poor performance in
North America and tumbling golf sales, Mr. Hainer had to slash his
ambitious financial targets for 2014 and 2015.
He issued two surprise profit warnings in a year that investors
had expected to be particularly good due to the FIFA World Cup.
Suddenly, activists began raising concerns about his management
skills. Some even demanded his departure.
Mr. Hainer, on the other hand, refused to move. He had learned
from his mistakes, he said at the time. He promised his new game
plan was already under way.
Since then, Mr. Hainer has reshuffled the company's North
American management, boosted its marketing budget, begun developing
local and in-store production facilities, and tried to enhance
brand awareness through collaborations with profiled U.S. athletes
and pop stars.
In the past year, Adidas has been one of the best-performing
companies on the Frankfurt stock exchange. Its profits have risen
every quarter.
Analysts have in recent months pointed to the general growth of
the sporting goods industry when talking about Adidas's numbers,
given that competitors Nike and Under Armour Inc. also have been
delivering strong results.
Bryan Garnier analyst Cé dric Rossi said Wednesday that Adidas's
most recent figures are also a sign of a successful company
strategy.
"Today's numbers suggest that Adidas also has been better at
execution, marketing and launching the right products at the right
time," he said.
Mr. Hainer's efforts even seem to show results in the North
American market, where Adidas had been struggling for decades.
NPD analyst Matt Powell said Adidas's U.S. resurgence is
ongoing. According to NPD figures, the company performed
particularly well in the lifestyle running, classics and casual
footwear segments in March.
"Adidas moves from two years ago are really paying off," Mr.
Powell said.
Write to Ellen Emmerentze Jervell at ellen.jervell@wsj.com
(END) Dow Jones Newswires
April 27, 2016 05:15 ET (09:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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