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Adidas Net Income Climbs in Quarter, Year

The German sports equipment manufacturer’s organic growth rate in 2011 was the fastest since 2006.

PARIS — Adidas AG chief executive officer Herbert Hainer heralded the “best year in the history of our company” as he reported the German sports equipment manufacturer’s fourth-quarter and full-year 2011 results Wednesday.

This story first appeared in the March 8, 2012 issue of WWD.  Subscribe Today.

Adidas said net income more than doubled to 17 million euros or $22 million in the fourth quarter, compared with 7 million euros, or $9.1 million, in the prior-year period.

Fourth-quarter net sales for the group, which is the world’s second-largest sporting goods maker after Nike Inc., grew 11.3 percent to 3.26 billion euros, or $4.22 billion. Adidas brand sales grew 14.8 percent to 2.4 billion euros, or $3.1 billion.

The market penalized the company in trading Wednesday, with its share price falling 3.1 percent to 27.82 euros, or $36.63, on the Frankfurt stock exchange, for issuing lower than expected guidance for 2012.

Adidas said it expects currency-neutral sales to increase in the mid- to high-single-digit range for 2012, and a 10 to 15 percent increase in earnings per share.

“Despite the high degree of uncertainty regarding the global economic outlook and consumer spending, sales development will be favorably impacted by the group’s high exposure to fast-growing emerging markets as well as the further expansion of retail,” Adidas stated, adding that it expects key sporting events during the year to stimulate sales.

For full-year 2011, the company reported net income up 18 percent to 670 million euros, or $931.3 million. For the same period, the company registered net sales up 11.3 percent to 13.34 billion euros, or $18.54 billion.

The year 2011 commenced the group’s five-year turnaround plan Route 2015. “At the start to any strategic plan, it is important to gain momentum quickly and set a precedent by hitting targets. In this respect, we couldn’t have asked for a better start,” Hainer stated.

“We enjoyed the group’s fastest organic growth rate since 2006, as sales increased 13 percent currency-neutral,” he added.

Sales growth was driven by strong performances in most of the group’s business segments. Wholesale revenues climbed 11 percent on a currency-neutral basis, mainly due to 14 percent growth at the Adidas brand, the group said. Sales of the Reebok brand fell 4.4 percent, however.

Retail sales increased 14 percent on a comparable-store basis and 20 percent currency neutral. In other businesses, revenues grew 11.3 percent, mainly due to a strong increase at TaylorMade-Adidas Golf.

Last year, sales in Western Europe increased 10.7 percent to 3.92 billion euros, or $5.45 billion, the group said, with strong business in Germany, France, Spain and Italy.

In emerging European markets, currency-neutral revenues grew 22 percent to 1.6 billion euros, or $2.22 billion, particularly thanks to strong business in Russia. In North America, sales were up 15 percent to $3.1 billion euros, or $4.31 billion.

Greater China saw revenues grow 23 percent to 1.23 billion euros, or $1.71 billion, while in the rest of Asia, the group saw lesser growth of 5 percent on a currency-neutral basis, to 2.13 billion euros, or $2.96 billion. Currency-neutral Latin American sales increased 10 percent to 1.37 billion euros, or $1.90 billion.

Dollar figures are converted at the exchange rate for the periods to which they refer.