PARIS — Adidas on Thursday said strong business in the U.S. and China in the first half has fueled its confidence in achieving higher targets for sales and profit this year.
“The growth that we have seen in China is significant and, of course, the growth that we are having in the U.S., specifically with the Adidas brand, is something that we haven’t seen for many, many years, and that is why we are very confident for our guidance for the remainder of the year,” chief financial officer Harm Ohlmeyer said on a conference call.
The sportswear giant last week said it was raising its sales target for the year to between 17 and 19 percent, an increase from its previous expectations of between 12 and 14 percent.
Chief executive officer Kasper Rorsted defended the initial figure, noting that it had already topped the forecasts of competitors, and that now the group has better visibility on the rest of the year.
All regions except for Russia posted double-digit sales growth, excluding currency effects. China and North America clocked the fastest growth, up 28 percent and 26 percent, respectively, with revenues in Europe rising 19 percent.
Rorsted said the group’s performance in Russia, where it is closing stores, reflected economic pressures from sanctions and low oil prices. The country is not an important market for the group, he stressed, estimating that it represents just 2 percent of the global market for sporting goods.
Adidas considers the U.S., which represents around 37 percent of the global market, “a key opportunity going forward,” Rorsted said. The group aims to build a stronger position there for its Adidas brand over the long term, he said, noting that despite progress, “we are by no means where we want to be.”
The company, which competes head-to-head with Nike in other markets around the world, trails its competitor in the U.S.
Adidas is setting up a factory in Atlanta, which it expects to open by the end of the year, the executive added.
To illustrate its rapid expansion in Asia, Rorsted said swelling ranks of employees have led the group to change buildings in China.
Adidas, which released preliminary results for the quarter as well as the target increases in July, said that net profit from continuing operations rose 16 percent to 347 million euros for the period.
Sales over the quarter jumped 19 percent excluding currency effects, handily beating consensus expectations of 14 percent, according to UBS. Growth was led by the Adidas brand, which posted a 21 percent rise over the quarter.
Reebok continued to lag the star brand, growing 4.9 percent. Rorsted said the group is confident it is taking the right steps to improve the business of the brand, which was negatively affected by store closures in the U.S. It has completed 35 out of some 50 planned closures in the U.S.
The Adidas ceo, who is driving a push to increase online sales, reiterated his commitment to the strategy: “As one of the leading sports companies in the world, we have to go where the consumer is and the consumer is digital.”
He added that a focus on women’s products at Adidas was also paying off, noting that it was growing faster than the Adidas brand.
Including the contribution from TaylorMade, Adams Golf, Ashworth and CCM Hockey, net profit fell 46 percent over the quarter. The company is selling the golf and hockey brands in order to focus on its main brands Adidas and Reebok.
Adidas said last week it has entered into a definitive agreement to sell CCM Hockey to a newly formed affiliate of Canada’s Birch Hill Equity Partners. The transaction, valued at $110 million, is expected to be completed during the third quarter of 2017.