Boosted by the World Cup soccer championship and its lifestyle lines, Adidas AG on Thursday said third-quarter profits increased 13 percent, beating analysts' forecasts. Still, the firm cut its profit outlook for 2007 as it plans to accelerate investments in the Reebok brand, sending its shares down 7.2 percent.
The company projected net income will increase by 15 percent in 2007, down from earlier forecasts of 20 percent growth, as the company spends more on advertising, new media, point-of-sale communications, product development and initiatives to grow Reebok in emerging markets. The group plans to roll out 75 Reebok stores in Russia and 400 stores in China next year.
"More work is needed [at Reebok]," Herbert Hainer, Adidas AG chairman and chief executive officer, said during a conference call, adding the brand was taking longer to gain traction, especially in North America and the U.K., than "initially anticipated." However, Hainer said he was confident and assured the group would show improvements in the second half of 2007.
For 2006, the group said sales would reach 10 billion euros, or $12.5 billion, for the first time in Adidas history.
The German activewear giant said third-quarter profits climbed to 244 million euros, or $311.1 million, from 215 million euros, or $262.4 million, a year earlier. Sales soared 53.3 percent to 2.95 billion euros, or $3.76 billion, from 1.92 billion euros, or $2.34 billion, a year ago.
Excluding Reebok, sales rose 11.9 percent to 2.15 billion euros, or $2.74 billion. For the first nine months, profits rose by 22 percent to 469 million euros, or $592.9 million, on a sales increase of 53 percent, to 7.84 billion euros, or $9.91 billion. Currency conversions were made at average exchange rates for the period to which they refer.
Adidas' stock closed at 38.07 euros, or $47.59, on the Frankfort Stock Exchange on Thursday.
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