Adidas is launching a share buyback program starting next year.
Beginning in January, the German sports brand will extend a share buyback program it instituted this year with plans to buy back shares worth up to 4 billion euros through 2025. This comes on top of a 1 billion share buyback the company completed this year. Its intention is to return up to 5 billion euros to shareholders through regular share buybacks during this five-year cycle, along with annual dividend payouts of between 30 percent and 50 percent of net income from continuing operations, the company said Thursday.
Adidas said that it plans to “generate substantial free cash flow until 2025 and return the majority of it — between 8 billion and 9 billion euros — to its shareholders via dividend payments and share buybacks.” In addition, the company plans to return the majority of the cash proceeds from the Reebok divestiture to shareholders after the closing of the transaction, which is expected in the first quarter of 2022. As reported, Adidas has made a deal with Authentic Brands Group to sell its Reebok division for 2.1 billion euros.
“Over the next couple of years, our business will become significantly more cash generative than ever before”, said Harm Ohlmeyer, chief financial officer of Adidas. “And we will hit the road running in 2022: Driven by strong top- and bottom-line improvements, we will once again generate a high free cash flow, which we will almost entirely return to our shareholders next year.”
As with previous share buybacks, Adidas intends to cancel most of the shares repurchased during the program, which would reduce the number of shares available as well as the share capital.
In November, Adidas reported that in the third quarter of this year revenues increased 3.4 percent to 5.75 billion euros, a slowdown compared to the same period in previous years and slightly under market analysts’ expectations. Its operating profit in the period fell 8.5 percent to 672 million euros. It attributed the less-than-stellar showing to a challenging market in Greater China, COVID-19 lockdowns in the Asia-Pacific region and supply chain disruptions.
In other Adidas news, the company also revealed that it will release its first NFT drop of digital and physical products on Friday after partnering with NFT pioneers Bored Ape Yacht Club, gmoney and the team behind Punks Comic. The NFT will provide access to virtual wearables for the blockchain-based gaming world, The Sandbox, along with physical product including a hoodie, a tracksuit and gmoney’s orange beanie. The brand has also purchased a Bored Ape Yacht Club NFT, named Indigo Herz.