PARIS — With days to go until the Summer Olympics kickoff, Adidas AG said Tuesday that second-quarter earnings rose 12 percent, while sales advanced 5 percent.
For the quarter ended June 30, the world’s second-largest sporting goods maker after Nike saw its earnings increase to 116 million euros, or $181.3 million at average exchange for the period, thanks to higher operating profits plus a lower tax rate.
Due to what the group termed an improving regional and product mix, further own-retail expansion and favorable currency movements, gross margin reached 50.1 percent, up 2.7 percentage points versus second-quarter 2007.
That showing came on sales that totaled 2.4 billion euros, or $3.75 billion. Excluding currency fluctuations, sales grew 14 percent.
For the first half, earnings grew 23 percent to 286 million euros, or $437.7 million, on sales that rose 4 percent to 5.14 billion euros, or $7.87 billion.
“Our performance in the first half of the year puts us firmly on track to achieve all of our financial targets for 2008,” stated Adidas chief executive officer and chairman Herbert Hainer. “We even expect to exceed some of our original goals, and at the upcoming Olympic Games, we are ready to showcase the power of our brands to audiences around the world.” (For more on Adidas and the Olympics, see pages 8 and 9.)
The group’s sales remain, however, a tale of two brands. In the first half, Adidas remained the company’s powerhouse with revenues rising 10 percent year-on-year, while Reebok fell 11 percent and business at TaylorMade-Adidas Golf remained flat. On a currency-neutral basis, Adidas recorded 16 percent growth, Reebok declined 2 percent and TaylorMade-Adidas Golf grew 11 percent.
Sales remained weak in North America, falling 19 percent in the half to 1.16 billion euros, or $1.78 billion, and the group doesn’t expect any immediate improvement. “When you look at the performance of our competitors and retailers, the [U.S.] market is tough at the moment,” chief financial officer Robin Stalk said during a conference call Tuesday. “We don’t see any improvement in the near term.”
He played down the significance of sluggish North American sales, which were offset by double-digit growth across all other regions.
Boosted by the Euro 2008 championships, when the two Adidas-sponsored teams, Spain and Germany, played in the final, the brand’s soccer sales enjoyed double-digit growth. This helped drive the group’s overall sales in Europe, its largest market, up 11 percent to 2.35 billion euros, or $3.6 billion. Adidas expects to further exploit Spain’s win to improve its positioning in that market.
In Latin America, the company’s business grew 23 percent to reach 381 million euros, or $583.1 million.
In Asia, sales spiked 17 percent to 1.21 billion euros, or $1.86 billion. Stalk remained bullish on that market, despite recent reports that the region could face a slowdown. By yearend, Adidas will have opened 1,000 stores in China.
Adidas also has no immediate plans to pull its production out of China due to rising labor costs, despite a recent media report suggesting otherwise. “China remains our most important country of production: They have the most know-how,” said Stalk, noting, however, that some of its suppliers have begun opening factories in countries such as India.
For the full year, the Adidas group expects a high-single-digit sales rise overall, in currency-neutral terms. The company raised its forecast for the Adidas brand’s sales to low-double-digit growth from high-single-digit previously.
The group upped its full-year gross margin forecast to 48 percent from 47.5 percent, and raised its guidance for operating margin, which it said is likely to approach 10 percent versus 9.5 percent previously.
The Adidas stock closed up 7.7 percent to 41.31 euros, or $64.37 at current exchange.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye