Adidas Announces First Quarter 2014 Results

Adidas announces first quarter 2014 results.

Highlights:
-Group sales stable on a currency-neutral basis
-Results significantly impacted by negative currency effects
-adidas Group confirms full year guidance
-Retail sales increase 22% currency-neutral with comparable store sales up 8%
-Strong momentum in European Emerging Markets and Latin America with currency-neutral revenues up 28% and 19%, respectively
-Currency-neutral adidas and Reebok sales grow 5% and 3%, respectively
-Gross margin down 1.0pp to 49.1% due to negative currency effects
-Operating margin decreases 3.2pp to 8.6%
-Basic and diluted earnings per share decrease 34% and 35%, respectively

adidas Group currency-neutral sales remain stable in the first quarter of 2014
In the first quarter of 2014, Group revenues remained stable on a currency-neutral basis. Currency translation effects had a significant negative impact on sales in euro terms. Group revenues decreased 6% to € 3.533 billion in the first quarter of 2014 from € 3.751 billion in 2013. Currency-neutral Wholesale revenues increased 1% due to growth at adidas.

Currency-neutral Retail sales increased 22% versus the prior year, as a result of double-digit sales growth at both adidas and Reebok. Revenues in Other Businesses were down 27% on a currency-neutral basis, due to double-digit sales declines at TaylorMade-adidas Golf. This decline is primarily related to strategic changes the Group is implementing at TaylorMade-adidas Golf to realign key shipment, product and launch cycles to market demand patterns.

Currency-neutral revenues at Rockport also decreased, while sales at Reebok-CCM Hockey grew versus the prior year. Currency translation effects had a negative impact on segmental sales in euro terms. Wholesale revenues decreased 5% to € 2.357 billion in the first quarter of 2014 from € 2.481 billion in 2013. Retail sales rose 10% to € 794 million versus € 722 million in the prior year. Sales in Other Businesses declined 30% to € 382 million (2013: € 548 million).

"Our financial results for the first quarter reflect the challenging start to 2014 which we had expected," commented Herbert Hainer, adidas Group CEO. "Strong performances particularly in the emerging markets and in our own retail were masked by strategic changes to how we go to market at TaylorMade-adidas Golf as well as adverse currency effects. Looking in depth through our results, however, there are many positive underlying trends. Therefore, we can look forward to an accelerated period of growth and momentum for our Group for the remainder of 2014."