PARIS — A string of hit sneakers with Boost soles seems to be putting bounce in Adidas Group’s financial performance.
The German sporting goods firm reported net income in the first quarter zoomed 38 percent on a sales gain of 22 percent.
Releasing preliminary results on Wednesday, Adidas raised its guidance for 2016. It said net income from continuing operations should increase between 15 percent and 18 percent, up from previous guidance of 10 to 12 percent.
Sales in currency-neutral terms are expected to grow 15 percent versus a prior forecast of 10 to 12 percent.
The upgrade goosed shares, which ended the day up 6.4 percent.
Adidas’ performance in the quarter caught analysts by surprise. Barclays called it “outstanding,” having previously predicted a 10 percent gain in the group’s net income. “This is clearly a standout quarter,” its analysts said in a note to investors, attributing the success to “exceptional growth in the industry — helped by a strong trend for sneakers.”
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“The latest fashion for designer sneakers — the Yeezy with Kanye West has been very successful — and this trend in the sports style area is likely to continue in our view,” they said.
“The Adidas brand is holding an exceptional performance. It’s the heavyweight in our sneakers department, accounting for 40 percent of total sales,” Fabienne Ruset, head of footwear, accessories and luxury at French department store Le Bon Marché, told WWD.
She added: “We observe extraordinary enthusiasm around the Stan Smiths, which represent 65 percent of Adidas sales. We could sell more, but the brand imposes quotas. And the enthusiasm for the shoe doesn’t cool down with new styles rendered in different colors and materials, which is an incredible phenomenon.”
Other bestsellers are the Superstar and those models designed in collaboration with Stella McCartney. “Most recently,” Ruset said, “the NMD has also seen much success. The first drop sold out in two days.”
At Citadium, Paris’ urban apparel mecca, which boasts a large athletic footwear section, the NMD was gone within hours. “And we have bought a lot of pairs, because we knew they would be in demand. People were lining up for them in the morning, particularly the Asian customer, who accounts for a large group of Paris tourists,” said Citadium’s director Sophie Bocquet.
Luck, meanwhile, decides who gets a pair of West’s Yeezys. “They arrive in very small quantities, so we draw numbers,” she said, noting that in the last two years, two styles in particular have helped put Adidas on everyone’s radar: the Stan Smith, which the group relaunched in 2014 and which found “a loyal followership among fashionistas, including women, which was a surprise to us,” and the ZX Boost, which shot Adidas to the pole position in the running category, previously occupied by brands such as Nike and Asics. “Last year,” Bocquet revealed, “Adidas registered a 60 percent jump in sales at our store.”
According to the latest figures released by The NPD Group, in the U.S. alone the athletic footwear industry grew by 8 percent to $17.2 billion in 2015 — “one of the best performances the industry has had in a number of years,” NPD noted.
“Performance footwear, particularly running and basketball, cooled off in 2015 and we saw a rise in the more casual and retro styles. This will be an important trend to watch in 2016,” observed Matt Powell, NPD’s vice president and sports industry analyst. The strongest growth of the year came from the $3.5 billion classics category, driven by retro basketball and retro running shoes, up 30 percent in the year.
According to analysts at RBC, which had also predicted organic revenue to grow at 10 percent in Q1, Adidas’s success is due to “a positive sporting goods industry backdrop, strong momentum at the Adidas brand, a full first-half order book and upcoming management change, all of which have driven the stock to all-time highs,” they said.
For Adidas, the year contains two major sporting events — the Olympic Games in Rio de Janeiro and more importantly the Euro 2016 soccer championships — and lots of change.
In January, the German activewear brand named Kasper Rorsted it new chief executive officer. He is to join the company in August and succeed Herbert Hainer on Oct. 1 after a two-month transition period.
Hainer had come under pressure from investors last year after a string of profit warnings.
In the most recent quarter ended March 31, sales totaled 4.8 billion euros, or $5.29 billion, a 17 percent gain on a currency neutral basis.
Net income totaled 350 million euros, or $386.1 million, while operating profits improved 35 percent to 490 million euros, or $540.5 billion.
Dollar figures are converted from euros at average exchange rates for the three-month period.
Adidas is to publish its full first-quarter results on May 4.