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Adidas predicts record results
Sportswear and apparel brand increases full-year sales and earnings guidance on back of strong H1 performance
Adidas Group has increased its full-year sales and earning guidance off the back of strong performance in the first half (H1) of 2011.
In the first half of 2011, Group revenues increased 14 per cent on a currency-neutral basis. Currency translation effects had a negative impact on sales in euro terms, slowing Group revenues growth to 13 per cent or €6.337bn in the first half of 2011 from €5.590bn in 2010.
Currency-neutral wholesale revenues increased 13 per cent in H1, which the company said was driven by double-digit sales growth at both Adidas and Reebok.
Currency-neutral retail sales increased 21 per cent versus the prior year as a result of double-digit Adidas and Reebok sales growth.
Comparable store sales grew 15 per cent on a currency-neutral basis. Revenues in its other business segments increased 13 per cent on a currency-neutral basis, mainly due to double-digit sales growth at TaylorMade-adidas Golf.
In its financial statement, Adidas Group said: “After the stronger than expected first half year performance, management has decided to increase the full-year 2011 Adidas Group sales and earnings guidance.
“Management now forecasts Adidas Group sales to increase at around 10 per cent on a currency-neutral basis in 2011 (previously: increase at high-single-digit rate). High exposure to fast-growing emerging markets, the further expansion of retail as well as continued momentum at all key brands will more than offset the non-recurrence of sales related to the 2010 FIFA World Cup.
“Currency-neutral wholesale segment revenues are now projected to increase at a high-single-digit rate (previously: mid- to high-single-digit rate) compared to the prior year due to strong performance of the Adidas brand in Greater China and North America and a less severe decline in Japan than originally expected in the aftermath of the disaster earlier this year.
“Adidas Group currency-neutral retail segment sales are projected to grow at a mid-teens rate in 2011 (previously: low-double-digit rate). Comparable store sales are expected to contribute to the revenue growth at a higher rate than the expansion of the Group’s own-retail store base. Segmental revenues of other businesses are now projected to increase at a mid- to high-single-digit rate on a currency-neutral basis (previously: mid-single-digit rate).”
During the second quarter alone, Adidas Group revenues grew 10 per cent on a currency-neutral basis. Currency-neutral revenues in Western Europe increased 5 per cent, supported by double-digit growth at TaylorMade-adidas Golf and sales increases at Adidas, the Group said.
In European emerging markets, currency-neutral sales were up 21 per cent as a result of strong increases at both Adidas and Reebok. Group sales in North America grew five per cent on a currency-neutral basis, supported by double-digit increases at Adidas as well as TaylorMade-adidas Golf. In Greater China, Group sales were up 41 per cent on a currency-neutral basis, supported by strong growth in all major categories. Currency-neutral revenues in other Asian markets and Latin America grew six per cent and eight per cent, respectively.
In contrast to previous quarters, currency translation effects had a negative impact on sales in euro terms. Group revenues grew five per cent to €3.064bn in the second quarter of 2011 from €2.917bn in 2010.
Adidas Group chief executive officer Herbert Hainer (pictured) said: “No matter which retailer I speak to, or which market share statistic I read, our product sell-throughs are stronger than they have ever been.
“Despite severe external pressures from currency volatility and rising commodity prices, we were able to defend our profitability as a result of our unparalleled strength in innovation and design as well as supply chain excellence.
“After the strong first half performance, we are on our way to record sales and earnings in 2011. This is all the more notable as various currencies have been weakening versus the euro, which negatively impacts our financial results in the short term.”
Hainer added: “After outlining our strategic vision for the company through to 2015 late last year, we have wasted no time and come out of the starting blocks in typical adidas Group fashion: fast and focused.
“No matter which way we break down our results, by segment, by region or by brand, all facets of our business are excelling.”
