PARIS — Thanks to lower marketing expenses and a lower tax rate, Adidas AG said fourth-quarter net profits rose 151 percent, to 54 million euros, or $71.2 million, in the quarter.
The world’s second-largest sporting goods maker after Nike Inc. met its full-year 2008 sales and profits targets, but warned sales and profits would decline this year.
Chairman and chief executive Herbert Hainer said 2008 “was a great year, in which we delivered strongly and prepared all our brands for even better performance going forward.” Looking forward, he said: “Consumers will spend less. And that will have a bearing on virtually all consumer goods companies and retailers.”
In the quarter, strong growth at the Adidas brand offset declines at both Reebok and TaylorMade-Adidas Golf to lift group sales 6 percent to 2.57 billion euros, or $3.39 billion. Dollar figures have been converted from euros at average exchange rates.
Clocking up its eighth year of double-digit earnings growth, the group’s full-year net profits beat forecasts to grow 16 percent to 642 million euros, or $944.6 million. That showing came on full-year sales that rose 5 percent to 10.79 billion euros, or $15.89 billion. Apart from North America, all regions generated double-digit growth.
Boosted by an action-packed sporting calendar, Adidas, which celebrates its 60th anniversary this year, grew sales 10 percent to 7.82 billion euros, or $11.5 billion; Tailormade-Adidas Golf inched up 1 percent to 812 million euros, or $1.19 billion, while Reebok continued its downward trend. The brand posted an 8 percent sales decline to 2.15 billion euros, or $3.16 billion.
The company said Reebok has now cleared out most of its old lower-priced stock and hopes upcoming product innovations, such as the partnership with Cirque du Soleil announced last week, will help drive the brand to maintain sales levels in 2009.
However, Hainer warned that ongoing discounting in mature markets plus slowing growth rates in emerging markets, rising raw material and labor costs would impact its 2009 performance. The company is forecasting a low- to midsingle-digit sales decline on a currency-neutral basis. It also expects operating margin and earnings per share to decline this year.
Reflecting the tougher climate, Reebok’s order backlogs at yearend were down 17 percent while backlogs for Adidas were down 6 percent.
Hainer said the group will take a two-fold strategy to tackle the current downturn: Controlling costs while at the same time investing in developing its own retail doors and signing partnerships. “We will not cost-cut our way out of this crisis,” Hainer insisted Wednesday. “I believe the real winners of this crisis will be the ones who remain consistent with their long-term strategies.”
He added the group will continue to prioritize its own retail network with plans to generate 35 percent of revenues through its own stores, shop-in-shops and e-commerce outlets in the coming years, from 18 percent in 2008. Next week, Adidas will unveil a Paris boutique for its new fashion-orientated SLVR label after a New York boutique opened in February.
Adidas share price closed up 0.31 percent on the Frankfurt bourse to 23 euros, or $28.90.
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews