Adidas lifts profit outlook after third quarter bounce
Adidas AG
€227.20
11:50 25/04/24
German sportswear giant Adidas has raised its full year profit forecast despite softer sales than previously expected.
Xetra DAX
17,972.80
11:50 25/04/24
Net profit from continuing operations rose 19% to €656m in the third quarter of its trading year, and basic earnings per share from continuing operations jumped 21% to €3.26.
Gross margin increased 1.4 percentage points to 51.8%, driven by an "improved pricing, channel and category mix, reflecting the company’s focus on the quality of its top-line growth, as well as lower sourcing costs,” Adidas said.
Due to the strong profits in the first nine months of the year, Adidas increased its profitability outlook for the year, targeting 16-20% growth in net income from continuing operations to €1.66-1.72bn, compared to previous guidance of 13-17% growth.
This was despite management now projecting revenues will grow at 8-9% compared to the previously communicated 10%, due to “lower-than-initially-expected” growth in Western Europe.
Adidas revenues rose 8% to €5.87bn in the third quarter as direct-to-consumer revenues grew a double-digit rates with strong support from e-commerce, which was moderately shy of an average analyst forecast of €5.92bn.
While the three stripes of Adidas has been grabbing market share from rival Nike in North America, the US outfit has swooshed higher in Europe, Middle East and Africa.
Adidas sales fell 1% in Europe in the third quarter compared to last year, but leapt 16% in North America and 15% in Asia-Pacific. Ecommerce sales rose 76% in the three-month period.
“We delivered high-quality growth again in Q3,” said CEO Kasper Rorsted, pointing to "strong profitability improvements despite a significant increase in marketing investments and severe currency headwinds".
He added: “With these results, we are confident to reach a higher-than-expected profitability level in 2018 and remain firmly on track to achieve our long-term targets until 2020.”