BERLIN — Adidas Group improved its profit performance in the first quarter, with net income gaining 6 percent to 308 million euros, or $406.8 million.
Gross margin increased 2.4 percentage points to 50.1 percent, the group’s “highest-ever” quarterly gross margin, which was above 50 percent for only the second time in its history. Adidas cited a positive impact from more favorable pricing, product and regional sales mix as well as a larger share of higher margin retail sales for the development.
The sales picture was impacted by currency effects and particularly strong sales comparisons from the previous year fueled by UEFA Cup and Olympics-related business. Sales slipped 2 percent to 3.75 billion euros, or $4.95 billion, in the three-month period ended March 31.
On a currency-adjusted basis, sales were flat for the quarter.
The group’s wholesale business was down 5 percent to 2.48 billion euros, or $3.28 billion, while retail sales, driven by both the Adidas and Reebok brands, grew 4 percent to 722 million euros, or $953.7 million.
Dollar figures are converted from euros at average exchange rates for the period in question.
Regionally, greater China posted the strongest sales gains, 6 percent, followed by 4 percent in Latin America, 2 percent in North America and 1 percent in European emerging markets. Sales in the group’s largest market, Western Europe, fell 7 percent, pressured by declines in Spain, Italy and the U.K. Other Asian markets posted a 10 percent drop, dragged down by Japan.
In a conference call, Adidas chief executive officer Herbert Hainer said, “The Adidas brand again came out on top, despite running up against some high numbers in the previous year’s quarter.” Adidas brand sales were up 1 percent, with double-digit growth in all key categories, he said. In the running segment, where sales rose 12 percent, he called the February launch of Energy Boost “the most successful running shoe launch from a commercial standpoint ever. We were almost completely sold through, and presales via e-commerce were up too.”
As for Reebok, where sales for the quarter were down 14 percent in constant currencies, he said the performance was in line with expectations. He predicted the brand’s return to growth later this year with new footwear product launches during the back-to-school period.
Double-digit sales increases at TaylorMade-adidas Golf drove revenues in the group’s Other Businesses unit up 6 percent for the quarter.
For the year ahead, Adidas confirmed its guidance, which forecasts a midsingle-digit increase in currency-neutral sales, but noted “currency translation is expected to negatively impact top-line development in reported terms.”
Net income attributable to shareholders is expected to reach 890 to 920 million euros, or $1.16 billion to $1.2 billion at current exchange, compared with 791 million euros in 2012. “Despite negative currency translation, we are forecasting a net increase of between 12 and 16 percent, a new record level,” Hainer declared. Improvements in the group’s gross margin, lower other operating expenses as a percentage of sales and more favorable tax rates are expected to propel the group’s earnings momentum.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast