Sportswear giant Adidas – owner of Reebok and golf brand TaylorMade – today revealed a 97% slide in profits for the first three months of this year.
The gloomy trading update emerged as the German firm announced plans to speed up its restructuring through the removal of a tier of regional management. It is also carrying out a review of under-performing retail stores.
Adidas posted net profits of just €5m after sales decreased by 6% in the first quarter and the company faced higher raw material and wage costs. It warned margins and earnings per share were expected to decline this year, before gaining impetus ahead of the 2010 World Cup.
Chief executive Herbert Hainer said: “We’ve faced a number of economic and market challenges in the first quarter of 2009.
“Our results have been materially affected by higher input prices, currency devaluation effects and restructuring costs.”
He said the aim of the latest business overhaul would be to bring the Adidas brands and products “closer to the consumer”.
“The current economic climate adds urgency to accelerate our plans,” he added.
The company hopes that by removing a layer of regional management it will strengthen the ties between the global organisation and local markets. It did not disclose how many jobs may be affected.
Since 2000, the group has grown in complexity from 95 companies to 190 worldwide. Recent deals have included the 2005 takeover of US firm Reebok for €3.1bn.
Adidas has UK offices at Stockport, with Reebok at Bolton and TaylorMade in Basingstoke.