Agenda-setting intelligence, analysis and advice for the global fashion community.
FRANKFURT, Germany — Adidas AG reported third-quarter profit that beat analysts' reduced estimates as the company made strides in soccer and running sales, helping offset declining revenue at its golf business.
Net income fell to 282 million euros ($353 million), the Herzogenaurach, Germany-based sporting-goods maker said in a statement today, compared with the average 268.4 million-euro estimate of analysts surveyed by Bloomberg.
Chief Executive Officer Herbert Hainer is under pressure to turn the company around after earlier this year scrapping sales and profit targets for 2015 and abandoning the 2014 earnings goal as well. Nike Inc. is taking share in the U.S. and encroaching on Adidas’s home turf in Europe, while the market for golf equipment is slumping.
“We have been aggressively addressing our key challenges: restructuring and stabilizing TaylorMade-adidas golf, adjusting our business in Russia/CIS and intensifying our efforts to revive momentum and growth in the U.S.,” Hainer said in the statement.
ADVERTISEMENT
Sales next year are forecast to increase at a mid-single- digit rate, while net income will grow at a higher rate than group sales, the company said. Hainer will present a new strategic plan in March.
Adidas shares have dropped 39 percent this year, making them the worst-performing member of the 30-stock DAX Index. The shares gained 0.9 percent to 56.76 euros yesterday.
Reduced Forecasts
The company has reduced its forecast for net income this year, predicting about 650 million euros, compared with the 830 million euros to 930 million euros it previously anticipated. It also ditched its target for sales of 17 billion euros next year and an operating margin of 11 percent of revenue.
Third-quarter sales were 4.1 billion euros, beating analysts’ 4 billion-euro estimate.
Hainer is facing investor discontent and is preparing next spring to articulate a strategy through 2020 that the 60-year- old CEO’s successor can pick up. Hainer’s contract as chief executive expires in 2017.
On Oct. 1, Adidas said it plans to buy back as much as 1.5 billion euros of its stock over the next three years.
Nike in September reported a 23 percent surge in quarterly net income, getting a boost from this summer’s soccer World Cup and 18 percent sales growth in China. American sports gear maker Under Armour Inc. has also put Adidas in its crosshairs.
By Aaron Ricadela; editors: Celeste Perri, Kenneth Wong, Thomas Mulier.
