Adidas shares fall on sales

Sales growth at Adidas slowed faster than analysts had expected, sending the shares to their steepest decline in 12 weeks.

Revenue advanced 8.7%, less than half the 20% booked in the second quarter, and below the average of analysts’ estimates.

The shares fell 2.3% at one stage. Nonetheless, the shares have rise 18.75% this year, valuing the sporstwear firm at €37.8bn.

“Some market participants might be concerned by the slower top-line momentum,” Warburg Research analyst Joerg Philipp Frey said.

Sales missed consensus estimates on “somewhat weaker” growth in Europe and North America, he said. Operating profit still advanced by more than one-third to €795m, beating analyst expectations, as it sold more expensive products, and sales of footwear advanced 14%.

Revenue in north America grew 19% to €1.1bn, an all-time high. “So far we have grown every quarter this year with 30% plus in the US, and we are not seeing any slowdown,” chief executive Kasper Rorsted said in an interview.

“We continue to see very, very strong demand for our products, and we continue to expect a very strong fourth quarter. It’s clear we are gaining market share in the US,” said Rorsted.

The sporting-goods industry this year has been a tale of divergence. Under Armour posted its first sales decline since it went public last month, while Puma, like Adidas, is benefiting from a trend toward more sportswear worn outside of gyms, prompting it to lift its profit forecast three times this year. Amazon is also moving into private-label sportswear, setting the stage for further upheaval in the US, where Adidas’s Reebok brand is already struggling to turn a profit.

“Overall the market is big enough also for an Amazon moving into this market,” Rorsted said. “We think that will not change the market fundamentally, but we are seeing the consumers going online.”

Revenue generated from electronic commerce advanced 39% in the quarter, the company said. While sales of Adidas-brand products jumped 10%, those of Reebok declined, and Rorsted said it may take until next year for the brand to grow again.

“The rate of revenue and earnings growth is likely to moderate after two-and-a-half years of super-cycle,” Piral Dadhania, an analyst at RBC Europe, wrote in a note.

Bloomberg


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