Adidas is getting its mojo back.
The Herzogenaurach, Germany-based sporting goods firm on Thursday raised its full-year guidance for 2015, following a better-than-expected performance in the third quarter. The company now expects currency-neutral sales to increase at a high-single-digit rate versus the previously projected mid-single-digit rate.
The news sent the activewear group’s shares up 8.6 percent to close at 89.21 euros, or $ 96.35 at current exchange.
Net income advanced 10.4 percent to 314 million euros, or $349 million, in the three months ending Sept. 30, buoyed by growth at Adidas (up 19 percent), Reebok (up 6.6 percent) and TaylorMade-Adidas Golf (up 15.4 percent).
Net sales rose 17.7 percent to 4.8 billion euros, or $5.3 billion, in the three months ending Sept. 30, logging the highest quarterly turnover the group has ever generated, according to the company.
All geographies saw strong double-digit growth except Japan, which was up 7.4 percent, and Russia/CIS, which plummeted 34.1 percent in the quarter.
By contrast, sales in Greater China soared 35.4 percent. North America and Europe grew 25.5 percent and 20.1 percent, respectively.
Dollar figures are converted from euros at average exchange rates for the period in question.
Speaking on a conference call with analysts on Thursday, the group’s chief executive officer Herbert Hainer — who has been under pressure over the group’s poor performance in the last few quarters — insisted that the positive results were not a matter of chance, but a “direct consequence of our relentless focus on the consumer.”
Adidas introduced an ambitious five-year plan in March, after the group swung into loss at the end of 2014. The efforts are clearly paying off, Hainer noted. “The great momentum that Adidas and Reebok are enjoying across the globe proves that our products and marketing are resonating extremely well with the target audience, both in the lifestyle and the performance arenas.”
Hainer lauded the first nine months for helping the group reach “the 2015 goal line much faster than anticipated,” as net income for the period rose 7.6 percent to 683 million euros, or $761 million, while sales surged 16.7 percent to 12.7 billion euros, or $14.2 billion, with Adidas and Reebok leading the way.
Sales at TaylorMade-Adidas Golf edged up 0.7 percent during the period and slid 12.7 percent in currency-neutral terms, indicating that the struggles were far from over. The group said it would reduce the global workforce of its golf business by 14 percent by the end of the year, cutting about 200 jobs, in an effort to redesign the brand’s structure and streamline its global operations.
“While this will negatively impact the group’s profitability by a low-double-digit million euro amount in the fourth quarter, the result will be a more nimble organization which will have a positive impact on the group’s profitability from 2016 onwards,” Adidas noted.
Hainer said he was getting “a lot of calls from interested parties,” but would not comment on a possible sale of the ailing golf unit before the first quarter of 2016, when all options are on the table.
The results come on the back of high marketing spending, which the firm intends to continue, ahead of the Euro 2016 soccer tournament. “Our increased brand investments — up almost 20 percent during the first nine months — have raised the bar when it comes to creating consumer excitement,” said Hainer, pointing to “industry-leading product franchises and cutting-edge communication.”
A new franchise for Originals is slated for December. The line surged 33 percent in the third quarter, buoyed by Kanye West’s Yeezy Season 1 collection, which saw customers queue for hours in anticipation of the new footwear and apparel styles.
In the fourth quarter, Adidas is expected to launch a new basketball campaign before activating its newly acquired assets Houston Rockets forward James Harden and Green Bay Packers quarterback Aaron Rodgers in the first quarter of 2016.
Waiting for a successor to Hainer’s post, which he has held for almost 15 years, the group has extended the contract of executive board member Roland Auschel, responsible for global sales, until 2019.