Adidas lifts profit outlook after ‘strong’ sales in third quarter

FRANKFURT: German sporting goods maker Adidas on Wednesday lifted its profit expectations for 2018 after a “strong ” third quarter that saw brisk global demand for its sportswear and sneakers.

But the group’s Reebok brand continued to struggle, despite the efforts of British fashion designer Victoria Beckham who unveiled her first mini collection for the brand. The Adidas group posted a net profit of 656 million euros ($751 million) between July and September, up 19 per cent on the same period a year earlier.

Growth

Revenues increased by a currency-neutral eight per cent to 5.9 billion, Adidas said in a statement, powered by double-digit growth in the key regions of North America, China and “excellent” online sales.

Sales in Russia were up seven per cent as the group continued to benefit from a World Cuprelated boost even after the football extravaganza ended. Chief executive Kasper Rorsted hailed a quarter marked by “high-quality growth”.

“We achieved strong profitability improvements despite a significant increase in marketing investments and severe currency headwinds,” he said.

The Bavaria-based group singled out Argentina as a weak spot, where revenues were negatively impacted by the country’s currency woes.

Sales at struggling US sports brand Reebok meanwhile plunged nearly five per cent, despite a robust performance from its Classics shoe range. Reebok has struggled to impress at Adidas since it was snapped up in 2005 in an attempt to narrow the gap with main rival Nike.

Restructuring

The US brand is undergoing a vast restructuring that includes store closures and a stronger focus on the women’s market, boosted by the likes of Victoria Beckham.

The singer-turned-designer presented her debut capsule collection for Reebok in July, a minimalist line inspired by the 1990s and former basketball superstar Shaquille O’Neal.

Looking ahead, Adidas said it is now expecting net income for the whole of 2018 to grow 16 to 20 per cent to 1.6-1.7 billion euros, up from an earlier predicted increase of 13 to 17 per cent.

Full-year revenues are expected to climb by eight or nine per cent year-on-year, down from a previous estimate of around 10 percent “due to lower-than-initially-expected growth in western Europe”.