Adidas sees flat sales in Europe in second quarter

Ruben Hill
May 4, 2018

Adidas has reported currency-neutral revenue increase of 10 percent in the first quarter.

Adidas made about 10 percent of its sales in Russian Federation in 2012 but has seen the market decline to less than 3 percent of revenue due to years of recession there, forcing the German company to close dozens of stores. From a channel perspective, e-commerce channel saw sales increase of 27 percent in the quarter under review.

"We managed to grow the bottom line significantly faster" than revenues, chief executive Kasper Rorsted highlighted, "while continuing to invest into creating brand desire". In North America, revenues went up 21 per cent, while China drove strong results in Asia as revenues were up 26 per cent.

Adidas' success can partially be attributed to double-digit growth in North America, Asia and Latin America.

Rorsted said sales in Russian Federation, which tumbled 16 percent in the first quarter, could get a boost in the second quarter from the competition as Adidas opens pop-up stores, but he noted that the economy remained in trouble due to Western sanctions.

Operating margin for the quarter was up 1.8 percentage points to 13.4 percent, while gross margin increased 1.5 percentage points to 51.1 percent.

Net profit attributable to shareholders surged 18.7 percent year-on-year, to 540 million euros ($647 million) between January and March.

Basic earnings per share from continuing operations increased 16% to EUR2.65 from EUR2.29.

Looking ahead to the full year, the group expects a roughly 10-percent increase in worldwide currency-adjusted sales, again fuelled by North America and Asia-Pacific.

Basic EPS from continuing operations is expected to increase at a rate between 12% and 16% compared to the prior-year level, excluding the negative one-time tax impact in 2017.

Other reports by Click Lancashire

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