July 28, 2016 Bloomberg
Adidas AG increased its full-year forecast for a fourth time this year after receiving boosts from the Euro 2016 tournament and a payment to bring an early close to a sponsorship deal with England’s Chelsea soccer club.
Currency-neutral sales growth this year will increase in the “high teens,” Adidas said Thursday. The German shoemaker previously forecast growth of about 15 percent. Profit from continuing operations will increase as much as 39 percent, approaching 1 billion euros ($1.11 billion), compared with the 25 percent increase the sports gear maker had seen earlier.
Shares of Adidas rose as much as 5.3 percent to a record in Frankfurt. The stock has gained 63 percent this year, making it the best performer in Germany’s benchmark DAX index. That’s a marked turnaround from 2014, when Adidas was the worst.
This is the fourth time Adidas has increased its forecast this year, and its 21 percent organic growth in the second quarter is more than double what rival Nike Inc. posted in its most recent period, said Cedric Rossi, an analyst at Bryan Garnier & Co. The maker of Argentinian soccer star Lionel Messi’s cleats and popular street sneakers modeled on retro designs is having a resurgence as longtime Chief Executive Officer Herbert Hainer prepares to hand the reins to his successor, former Henkel AG chief Kasper Rorsted, this fall.
“They are gaining market share at the expense of Nike,” Rossi said. “Everybody is 100 percent convinced the Adidas turnaround is not only successful but also sustainable over the next quarters.”
Second-quarter operating profit rose 77 percent to 414 million euros, Adidas said. Sales increased 13 percent. Adidas said it plans to report its full second-quarter earnings on Aug. 4.
CEO Hainer pointed to double-digit sales growth in all key regions and product categories, and said a year-and-a-half old strategic plan to get sneakers to market faster and concentrate marketing on key global cities is starting to pay off.
Adidas got a lift from this summer’s Euro championships that let it sell replica jerseys for Germany and other teams. Second-quarter profit was also helped by a payout it got after London’s Chelsea club ended a sponsorship deal six years early. Investment bank Exane BNP Paribas estimated the early-termination payment added 70 million euros to Adidas’ operating profit and 50 million euros to net income.