PARIS — Adidas-Salomon AG is shedding its hyphenated half.
In a move to focus on more profitable sectors such as apparel, footwear and the golf category, Adidas-Salomon AG said Monday it has agreed to sell the Salomon division to Finnish sports equipment firm Amer Sports Corp. for 485 million euros, or $625.6 million at current exchange.
The sale, to be completed by the end of September, includes the Salomon, Mavic, Bonfire, Arc’Teryx and Cliche businesses, which cater to sports such as snowboarding, cycling and hiking. Amer, based in Helsinki, makes Atomic skis and Wilson tennis and golf gear, among other sports equipment labels.
“Salomon has been a great member of our group for the last eight years,” said Herbert Hainer, the group’s chief executive officer, during a conference call Monday. “However, we decided that now is the time to focus even more on our core strength in the athletic footwear and apparel market as well as the growing golf category.”
Adidas acquired the Annecy, France-based ski and sporting goods firm in 1997. At the time, then-president Robert Louis-Dreyfus touted the transaction as “a major step towards the establishment of the best portfolio of sports brands in the world.”
But Salomon ran up against a sluggish market for ski equipment and apparel, and high manufacturing costs hampered profitability. Last December, Salomon said it would cut about 160 jobs in France as it shifted production to cheaper Romania and China.
Investors, who have long been calling for Adidas-Salomon to shed the troublesome unit, cheered Monday’s news, sending shares in Adidas-Salomon up 7.7 percent to close at 129.30 euros, or $166.79 at current exchange, on the Frankfurt stock exchange.
The Salomon division saw first-quarter sales decline 9 percent to 112 million euros, or $146.9 million at average exchange rates, from 122 million euros, or $160.1 million, a year ago. Adidas blamed the drop in part on lower sales of inline skates, cycling components, and a general fall in the winter sports category.
“We stepped out [of Salomon] when we believed it was too expensive,” said Adidas-Salomon chief financial officer Robin Stalker.Hainer said the sale will reduce earnings volatility and said net income would rise by at least 20 percent in 2005 after the Salomon disposal.
Bolstered by solid footwear and apparel sales, Adidas-Salomon said net income for the first quarter ended March 31 soared 46 percent to 105 million euros, or $137.8 million at average exchange, from 72 million euros, or $94.5 million, a year earlier. Sales during the period gained 10 percent to 1.78 billion euros, or $2.34 billion, from 1.62 billion euros, or $2.13 billion.
“The Stella McCartney line [for Adidas] generated sales beyond initial projections,” said Hainer, who added that sales for TaylorMade-Adidas Golf also grew 28 percent and that sales for the Adidas 1 shoe “sold out at most retailers within a few hours of initial distribution.”
By geographical region, sales in North America climbed 15 percent to 378 million euros, or $496.1 million, from 328 million euros, or $430.5 million, a year ago.
In Europe, sales inched up 1 percent to 959 million euros, or $1.26 billion, from 951 million euros, or $1.25 billion, a year ago. In Asia, sales climbed 29 percent to 357 million euros, or $468.5 million, while in Latin America, sales soared 41 percent to 69 million euros, or $90.6 million.
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