Adidas shares rise as CEO reveals sales topped €20bn

Adidas shares rise as CEO reveals sales topped €20bn

Sales at German sportswear firm Adidas rose between 15% and 20% to more than €20bn in 2017, helped by growth in China, North America, and by online sales, chief executive Kasper Rorsted said

An Adidas spokeswoman said there was no change to the company’s forecast for sales to rise at a currency-adjusted 17% to 19% in 2017. It reports annual results on March 14.

Adidas shares were up 1.6%, marking the biggest increase among the largest German shares.

Analysts are forecasting a headline sales increase of 11% to €21.3bn for 2017, according to Thomson Reuters Eikon.

Speaking at a conference on Asia in Dusseldorf, Mr Rorsted said Adidas saw huge potential in China, which is its most profitable market.

Asked if he could imagine a Chinese investor becoming an anchor investor in the company, Mr Rorsted replied that he could imagine everything.

Its shares have now gained over 18.5% in the past year, valuing the company at €30bn.

Rival German sportswear maker Puma has also had a good run. Its shares have soared 23% in the past year to value it at over €5.45bn.

It is counting on the trend of sports shoes invading schools and offices in the US to continue unabated, bolstering its growth as an independent company.

The sportswear company said earlier this month it expected operating profit to rise by as much as one-third this year as its sports shoes and hoodies find their way into more young shoppers’ wardrobes.

The forecast comes after majority owner Kering in January said it plans to pass on most of its stake to investors to focus on luxury brands like Gucci, with shareholders voting on the proposal on April 26.

While that means more than half of Puma’s shares will be traded freely, the announcement has ended speculation about a possible takeover of the sportswear company.

Booming demand for suede sports shoes, classic tracksuits and other “athleisure” wear helped the company surpass €4bn in sales for the first time, as Nike and Under Armour in the US are losing ground.

Puma recently added actress Selena Gomez to its sponsorship roster alongside singer Rihanna as it shifts marketing expenses away from television to online media.

The company had put a lot of hope in its sponsorship of the Italian national soccer team, but after it failed to qualify for the 2018 FIFA World Cup, that deal will bring in significantly less money for the company, chief executive Bjoern Gulden said this month.

Puma has added the Senegalese national team to its roster, but doesn’t expect that partnership to be as lucrative as its relationship with Italy could have been.

“Italy not qualifying, of course, was tough for us, because — as you can imagine — you prepare for a World Cup not after qualification,” he said.

The strength of the euro cut Puma sales by 6% in the fourth quarter of 2017.

The company expects the trend to worsen in the first quarter of 2018, but the company is factoring that into its forecast.

Meanwhile, shares in Under Armour have fallen 18% in the past year, valuing the US sportswear maker at €7bn.

It has renewed its faith that it can bounce back from the worst slump in its history as robust international growth cushions weakness on the home front.

This month it reported fourth-quarter revenue that topped projections, led by a 47% increase in sales outside North America.

As part of its push to improve design and results, the company will eliminate about 40% of its products by the end of next year to focus on its best-performing lines.

It also announced another round of cost-cutting and restructuring.

The company expects 2018 to be similar to last year, with full-year revenue increasing at a low-single-digit rate from $5bn (€4.06bn) in 2017. North American sales will drop by a mid-single-digit percentage, while it sees international growth of at least 25%.

Just two years ago, Under Armour was an investor darling. At the time, NBA star Stephen Curry’s shoe line was pumping life into its foot wear business, helping boost 2015 revenue 29%.

Since then, it has been hurt by a rebound by Adidas and others.

Under Armour has called 2017 a “reset year”.

It made management changes, including a new chief operating officer and finance head, and has admitted that -- like many young companies -- it grew too fast.

Reuters and Bloomberg

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