Adidas makes dent in Under Armour's North America revenue; posts 21% surge
Adidas, the Germany-based sportswear company, has announced the financial results of the first quarter of the current fiscal. “The first quarter results are as per our expectations. North America, Greater China and e-commerce were strategic focus areas for the company,” stated CEO Kasper Rorsted. During the quarter under review, the sportswear retailer’s revenues grew by 10 per cent on currencyneutral basis and 2 per cent in euro terms.
Adidas’ operating margin increased by 1.8 percentage points to 13.4 per cent in the reporting quarter. Its operating profit increased by 17 per cent to ¤ 746 million as compared to ¤ 637 million in the same quarter last year. Net income from continuing operations in the quarter under review was up 17 per cent to ¤ 542 million from ¤ 462 million in the same quarter in last fiscal. From a market segment perspective, on a currency-neutral basis, the combined sales of the Adidas and Reebok brands grew in most market segments. In North America, the company reported a 21 per cent increase in growth followed by Asia-Pacific with 15 per cent. 26 per cent increase in Greater China majorly contributed to growth in Asia-Pacific region. Notably, the revenues remained relatively flat in North America for Under Armour in the first quarter. Latin America and Western Europe reported growth of 10 and 5 per cent, respectively. The challenging market conditions led to a decline in sales in the emerging markets such as Russia/CIS. The sports retailer, which has been facing a tough time in the past few years, has now started returning to form. In the last quarter of fiscal 2017, it reported a 19 per cent increase in revenue on a currency-neutral basis. Adidas is facing a tough competition from Nike and Under Armour, which reported a 6 per cent increase in first quarter revenue to US $ 1.2 billion. The German retailer now expects to note around 10 per cent increase in sales on a currency-neutral basis in the coming months. North America and Asia-Pacific have been projected as major growth drivers. Net income from continuing operations is projected to increase to a level between ¤ 1.615 billion and ¤ 1.675 billion. It remains to be seen how Adidas maintains its growth rate to compete against the likes of Nike and Under Armour, which has been rapidly eating on Adidas’ sports market in the US.
The sports retailer, which has been facing a tough time in the past few years, has now started returning to form. In the last quarter of fiscal 2017, it reported a 19 per cent increase in revenue on a currency-neutral basis.