PARIS — Despite a 30 percent drop in third-quarter profits, German activewear giant Adidas AG said its confidence is growing, citing efficiency savings and the advent of next year’s FIFA World Cup, which could bring in revenues in excess of $1.91 billion.
This story first appeared in the November 5, 2009 issue of WWD. Subscribe Today.
“Consumer and retailer sentiment still hovers between fear and optimism. However, we are well prepared to face any challenges thrown our way,” group chief executive officer Herbert Hainer said Wednesday on a conference call with analysts. He said a “firm grip on inventories, a better financial position and a leaner organization” underlined his brightening outlook.
The second-largest activewear company after Nike said it expects 2009 earnings per share to decline to between 1.15 euros and 1.30 euros, or $1.69 to $1.91 at current exchange, and revenues to drop by midsingle-digit rates.
Net profits for the three months through Sept. 30 fell to 213 million euros, or $304.4 million, and were broadly in line with analysts’ estimates. Hainer called the results “a significant improvement in profits” compared with the second quarter, when the net dove 93 percent.
Group revenues decreased 6 percent to 2.89 billion euros, or $4.13 billion. Dollar figures were converted at average exchange for the periods to which they refer.
On a currency neutral basis, by brand, revenues fell 6 percent at Adidas and 12 percent at Reebok and TaylorMade-Adidas Golf.
Hainer noted the new product range and marketing campaign at Reebok, which Adidas acquired in 2006, had received encouraging feedback from retailers. He added the group would continue to clean up Reebok’s inventory and introduce products at a higher price point for better margins, such as the Easy Tone shoe, which sells for around $100.
Nine-month net profits declined 62 percent to 226 million euros, or $308.9 million, on revenues that decreased 4 percent to 7.92 billion euros, or $10.83 billion.
In the nine months, revenues fell in all regions, except Latin America, where sales gained 10 percent, and Asia, where they edged up 1 percent. Sales in Europe decreased 9 percent, following the end of the UEFA Euro 2008 soccer tournament, which generated strong revenues last year. Sales decreased 3 percent in North America.
Hainer said the group’s drive for “operational excellence has meant we have strongly improved our financial position, generating almost 740 million euros in net cash from operations over the last six months.”
He also underlined that 2010 would be “a record year for football,” and added that the soccer division will achieve more than 1.3 billion euros in revenue, or $1.91 billion.