ADIDAS NET DOWN 20%
Byline: James Fallon
LONDON — Adidas-Salomon AG Monday proved it lives up to its promises, even the grim ones.
The German sportswear brand said its net income fell by 20 percent, to $169.8 million, on a 9 percent rise in sales to $5.41 billion in the year ended Dec. 31. This compares with net profits of $212.7 million on sales of $4.99 billion in 1999.
The sharp drop in net profits is equal to about $3.74 a share and is exactly in line with the predictions the company has made since January 2000.
Herbert Hainer, the then-chief operating officer who last week was named the group’s chairman and chief executive officer, announced a $38.4 million “growth and efficiency program” last January and warned this would result in a drop in earnings per share of about 20 percent.
The goal of the program, he said, was to increase earnings per share from the year 2001 onward by about 15 percent.
At the pretax level last year, Adidas-Salomon said its earnings fell 13 percent, to $323.7 million from $371.3 million a year earlier. The decline resulted mainly from a 12 percent rise in operating costs to $1.96 billion.
The higher costs were related to the increased marketing expenditure associated with the Sydney Olympics and the Euro 2000 soccer championship, as well as the investment associated with the group’s growth and efficiency program.
Adidas-Salomon has been suffering over the last few years from lackluster designs and the fashion trend away from athletic footwear.
The group has been hit hardest in the U.S. market. It did not provide any details of its performance last year by product or by geographical region in advance of the full release of its financial results for 2000 on March 8.