Adidas AG reported third-quarter profits slid 11 percent due to negative currency effects and a continuing slide at its golf division. Currency-neutral (c-n) sales increased 9 percent. In currency-neutral (c-n) terms, sales increased 9 percent, including a gain of 12 percent at Adidas, 7 percent at Reebok and a decline of 36 percent at TaylorMade-Adidas Golf. Management confirmed its full year guidance.
Adidas Group currency - neutral sales increase 9 percent in the third quarter of 2014
During the third quarter of 2014, the Adidas Group continued to deliver robust top-line results. Group revenues increased 9 percent on a currency-neutral basis, driven by a double-digit sales increase in Retail and a high-single-digit revenue growth in Wholesale. All regions, except North America, contributed to the currency-neutral revenue growth.
Western Europe increased 10 percent, mainly as a result of strong sales increases in Germany, France, Spain and the UK. In European Emerging Markets, currency-neutral revenues were up 19 percent, driven by double-digit growth in Russia/CIS. Group sales in North America decreased 1 percent on a currency-neutral basis, as mid-single-digit sales growth at Adidas was more than offset by declines at TaylorMade-Adidas Golf and Reebok. In Greater China, Group sales were up 13 percent on a currency-neutral basis, due to continued momentum across all channels. Currency-neutral revenues in Other Asian Markets grew 6 percent driven by double-digit sales increases in South Korea and India. In Latin America, currency-neutral sales grew 16 percent, with double-digit increases in most markets, in particular Argentina, Brazil and Mexico.
From a brand perspective, the strong top-line momentum at both Adidas and Reebok continued during the quarter. Third quarter sales at Adidas increased 12 percent on a currency-neutral basis, driven by double-digit sales growth in the Sport Performance football and running categories, as well as at Adidas Originals & Sport Style. Sales at Reebok grew 7 percent on a currency-neutral basis, driven by sales momentum in the fitness training, walking and fitness running categories. Revenues in the TaylorMade-Adidas Golf segment declined 36 percent on a currency-neutral basis, as a result of the continued weakness in the golf market as well as TaylorMade-Adidas Golf’s ongoing efforts to clean retail inventories and the timing of new product introductions compared to the prior year period.
Revenues at Reebok-CCM Hockey increased 15 percent on a currency-neutral basis mainly due to growth in key categories such as skates and protective equipment as well as in hockey apparel. Rockport sales increased 5 percent currency-neutral. Currency translation effects had a negative impact on sale s in euro terms. Group revenues increased 6 percent to €4.118 billion in the third quarter of 2014 from €3.879 billion in 2013.
Third quarter gross margin declines 1.9 percentage points
The Group’s gross margin decreased 1.9 percentage points to 47.4 percent (2013: 49.3 percent) in the third quarter, mainly due to higher input costs as well as negative currency effects . In addition, increased clearance activities, in particular in Russia/CIS, contributed to the gross margin decline. Group gross profit increased 2 percent to €1.952 billion (2013: €1.913 billion). Other operating expenses as a percentage of sales decreased 0.9 percentage points to 38.7 percent compared to 39.6 percent the prior year. In euro terms, other operating expenses increased 4 percent to €1.594 billion, mainly as a result of higher marketing working budget expenditure. In addition, higher expenditure related to the expansion of the Group’s own-retail activities contributed to the increase in other operating expenses. The Group’s operating profit declined 13 percent to €405 million (2013: €463 million) in the third quarter. The operating margin decreased 2 .1 percentage points to 9.8 percent from 11.9 percent in 2013. Basic and diluted earnings per share for the third quarter decreased 11 percent to €1.35 (2013: €1.51).
“Our Group delivered a solid third quarter with accelerated growth rates in many of our key markets and categories. At the same time, 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 US, ” commented Herbert Hainer, Adidas Group CEO.
Adidas Group currency-neutral sales increase 6 percent in the first nine months of 2014
In the first nine months of 2014, Group revenues increased 6 percent on a currency-neutral basis, driven by sales increases in Wholesale and Retail. Currency translation effects had a negative impact on sales in euro terms. Group revenues grew 1 percent to €11.116 billion in the first nine months of 2014 from €11.013 billion in 2013.
Nine months Group sales increase driven by growth in Wholesale and Retail
In the first nine months of 2014, currency-neutral Wholesale revenues increased 6 percent, due to sales growth at both Adidas and Reebok. currency-neutral Retail sales were up 21 percent versus the prior year as a result of double-digit sales increases at Adidas and Reebok. Revenues in Other 3 Businesses were down 17 percent on a currency-neutral basis, due to double-digit sales declines at TaylorMade-Adidas Golf. Currency translation effects had a negative impact on segmental sales in euro terms.
By brand, revenues at Adidas grew 11 percent on a currency-neutral basis, driven by double-digit sales growth in the Sport Performance football and running categories, as well as at Adidas NEO. Sales at Reebok grew 6 percent on a currency-neutral basis, driven by double-digit increases in the fitness training, walking and studio categories as well as at Classics . Revenues in the TaylorMade-Adidas Golf segment declined 29 percent on a currency-neutral basis.
In the first nine months of 2014, currency-neutral Adidas Group sales grew in all regions except North America. Revenues in Western Europe increased 7 percent on a currency-neutral basis, driven by sales increases in Germany, France, Spain, the UK and Pol and. In European Emerging Markets , Group sales were up 20 percent on a currency-neutral basis, with double-digit sales increases in all of the region’s major markets. currency-neutral sales for the Adidas Group in North America decreased 7 percent, mainly due to sales declines in the USA. Sales in Greater China increased 10 percent on a currency-neutral basis. Currency-neutral revenues in Other Asian Markets grew 2 percent, driven by sales increases in South Korea and India. In Latin America, sales grew 22 percent on a currency-neutral basis, with double-digit increases in most markets, in particular Argentina, Brazil, Mexico and Colombia. Currency translation effects had a mixed impact on regional sales in euro terms.
