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Adidas Backs FY View After Q1 Results Beat Estimates

German sportswear maker Adidas AG (ADDDF.PK,ADDYY.PK) on Friday backed its forecast for the full year, after it reported a higher first-quarter profit that beat estimates, as margins improved from last year.

For the first quarter, net income attributable to shareholders totaled 308 million euros or 1.47 euros per share, compared to 289 million euros or 1.38 euros per share last year.

Operating profit for the period was 442 million euros, a rise from 409 million euros recorded in the same period a year ago.

Gross margin rose to 50.1 percent from 47.7 percent, on back of favourable pricing, product and regional sales mix as well as a larger share of higher-margin Retail sales.

Group revenues edged down 1.9 percent to 3.751 billion euros from 3.824 billion euros in the year-ago quarter, due to negative currency effects. Excluding currency shifts, group revenues were stable, helped by sales increases in Retail and Other Businesses.

Analysts estimated the company to earn 1.40 euros per share, on revenue of 3.77 billion euros, for the quarter.

Sales slid 5 percent in the Wholesale business to 2.481 billion euros and were down 3 percent on a currency-neutral basis, hurt by double-digit sales declines at Reebok.

Retail sales grew 4 percent to 722 million euros and were up 6 percent, when currency impact is not accounted, driven by sales growth at both adidas and Reebok.

On a currency-neutral basis, Western Europe and Other Asian Markets saw revenues dropping 6 percent and 4 percent, respectively.

Adidas group registered a 3 percent growth in sales in European Emerging Markets and North America. Greater China sales grew 6 percent and Latin America reported a 12 percent jump in sales in the quarter.

Looking ahead, the sports goods giant confirmed its annual outlook, expecting earnings per share in the range of 4.25 euros - 4.40 euros per share, excluding goodwill impairment, and group sales to increase at a mid-single-digit rate on a currency-neutral basis. Analysts estimate earnings of 4.54 euros per share, on revenues of 15.482 billion euros.

Group gross margin for the year is still anticipated to increase to a level between 48.0 percent and 48.5 percent, with operating margin at around 9.0 percent.

On Frankfurt's Xetra, Adidas shares are currently trading at 84.09 euros, up 5.77 percent.

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by RTT Staff Writer

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