Adidas raises outlook as United States sales rebound
Most competitors in the industry normally spend 10-11% of the same on marketing.
The world’s second-biggest sportswear firm said currency-neutral sales in North America – where it has been spending heavily on marketing as it attempts to break the stranglehold of rival Nike – rose 6%, after a flat first half. “Both Adidas and Reebok are enjoying great momentum across the globe”, Hainer said, referring to the company’s other main brand.
In the meantime, Adidas will keep working to restructure the unit, suffering from sport’s declining popularity, and would cut its global staff by 14 percent by the end of the year, which would incur a small hit to group profits in the fourth quarter. The athletics apparel and footwear company raised revenues and income forecasts for the full fiscal year.
Underlying or operating profit was up 26.5 per cent at 505 million euros on a 17.7-per cent increase in sales to 4.758 billion euros.
For the full year 2015, the company now expects net income from continuing operations excluding goodwill impairment to increase at a rate of around 10 percent, while previous expectation was in a range of 7 to 10 percent.
“Thanks to our outstanding performance during the first nine months, we are reaching the 2015 goal line much faster than we had anticipated”, said Hainer.
Net income from continuing operations grew by 20% to Euro 337 million, compared to Euro 280 million in 2014.
Third-quarter sales of €4.76bn were up 18pc, or 13pc excluding the impact of currencies, beating an average analyst forecast for €4.5bn and accelerating from 5pc the previous quarter. Like true champions, we will not rest on our laurels but will continue to build on our current strength to prepare ourselves for the next stage.
A year ago, Adidas went through one of its roughest periods in a long time, with a dramatic sales decline at its golf division, a poor performance in North America, and currency losses from the Russian ruble hurting growth. “The investments into our brands and a leaner golf organization will directly fuel next year’s top- and bottom-line performance and set us up for sustainable profitability improvements from 2016 onwards”.
Looking Ahead: Adidas increased its guidance for the fiscal year. Latin America currency-neutral sales are now projected to increase at a high-single-digit rate, while previous projection was in a mid-single-digit rate. The company reported a 10 percent gain in third-quarter profit that beat analysts’ estimates, led by sales growth in western Europe and China.