PARIS — Flexing the synergies of Adidas with its recently acquired Reebok arm helped push up Adidas AG's third-quarter profits 22 percent.
The German activewear giant beat analysts' forecasts and said Thursday it's on target to meet profit goals for 2007.
"Our group is set for continued growth in the rest of 2007 and beyond," Herbert Hainer, chairman and chief executive officer, said in a statement.
The company said third-quarter profits climbed to 298 million euros, or $409.4 million at average exchange rates for the three-month period, from 244 million euros, or $309.9 million, a year earlier. Meanwhile, sales in the quarter slipped slightly to 2.94 billion euros, or $4.04 billion, from 2.95 billion euros, or $3.74 billion, a year ago. Sales in the U.S. slipped 8.9 percent.
Gross margins increased 3.6 percentage points to 48.6 percent. Order backlogs for the Adidas brand, which analysts follow as a key indication of future sales, rose 16 percent in the third quarter on a currency-neutral basis, the highest improvement in nine years, according to the group. Reebok orders were down 2 percent in the period, or 8 percent in euro terms.
Hainer said Reebok limited its footwear production in order to reposition the brand at a higher price point. The brand's sales are expected to increase in 2008. "We are continuing to realize material net benefits from the Reebok integration process," Hainer said. "Our group's strong margin and earnings improvements reflect our focused commitment to drive long-term sustainable growth."
With major sporting events such as the Beijing Olympics and the European Soccer Championships in the lineup for next year, Adidas expects group sales to advance in high single digits on a currency-neutral basis in 2008.
"Next year's major sporting events will help brand Adidas increase market leadership in key regions," Hainer said. "And at Reebok, we will be launching the next phases of brand revitalization. I'm confident in our group's ability to successfully overcome challenges from macroeconomic headwinds and difficult retail conditions to even accelerate sales and earnings momentum in 2008 and beyond."
The company forecasts 2008 net profit will grow at a higher rate than in 2007.Hainer said he expects next year to take market leadership in China, which is poised to become the world's largest market for sporting goods by 2010. Averaging between 400 and 450 store openings per year in the country, Hainer said the group would inaugurate its largest Adidas flagship to date in central Beijing in time for the Olympics.
Adidas also said Thursday that Hans Friderichs has been named chairman of the firm's supervisory board. He replaces Henri Filho, who resigned from the position.
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