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PARIS — Adidas AG raised its earnings forecast for the third time this year after posting a 25 percent rise in third-quarter profit, but the company kept its margin outlook unchanged.
This story first appeared in the November 5, 2010 issue of WWD. Subscribe Today.
On Thursday, the world’s second-largest sporting goods company said earnings per share (EPS) in 2010 should increase to between 2.68 and 2.70 euros, or $3.76 to $3.79 at current exchange, representing a 5 percent increase from the previous forecast. And in its first forecast for 2011, Adidas said EPS should increase by 10 to 15 percent next year.
“It is clear we have made an explosive comeback in 2010, and I fully expect us to round off the year on a high,” chief executive officer Herbert Hainer said in a conference call.
Adidas now expects to post net income of 560 to 565 million euros, or $786 to $793 million, in 2010 as a whole, he added.
The group has raised the full-year sales forecast to an increase of 8 percent on a currency-neutral basis versus midsingle digits previously, while its retail sales are seen growing at a midteens rate, compared with an expected low-double-digit increase previously.
But Adidas still expects margins to rise to 47.5 percent from 45.4 percent in 2009. In 2011, group sales are expected to increase at a midsingle-digit rate.
The group plans to detail its strategy for the next few years at an investor day Monday at company headquarters in Herzogenaurach, Germany.
In the third quarter, net profit jumped to 266 million euros, or $343.2 million, from 213 million euros, or $304.4 million, a year earlier. Dollar rates are calculated at average exchange rates for the period in question.
Gross margin rose to 47.3 percent during the period from 45.3 percent a year ago, mainly due to lower input costs, fewer clearance sales and a larger share of higher-margin retail sales.
Group revenue rose 20 percent in the third quarter to 3.47 billion euros, or $4.47 billion, from 2.89 billion euros, or $4.13 billion, during the same period last year, representing a 10 percent increase on a currency-neutral basis.
Hainer said Adidas had turned a corner in Greater China, where wholesale revenues were up for the first time since 2008, helping to drive an overall sales increase of 9 percent, stripping out currency effects. The company has improved its merchandising, product offering and operational processes there.
“We have taken 12 to 18 months to really clean up the market, talk to the retailers, to educate them to a certain extent, and now bringing in new product,” the ceo said. “So you will see a positive trend there, as well, and this will continue in 2011.”