German sports goods giant Adidas AG (ADDDF.PK, ADDYY.PK) on Friday confirmed its full year and long-term financial targets, but slashed its sales outlook for the Reebok brand in 2015, while lifting the adidas brand sales goal for the same year.
For 2012, adidas continues to forecast new record sales and earnings. Currency-neutral sales are projected to increase at a rate approaching 10 percent from 2011, with earnings per share expected to grow 15 percent to 17 percent or 770 million euros to 785 million euros. Operating margin is forecast to increase to a level approaching 8 percent.
As per the company's strategic business plan "Route 2015," until 2015, the adidas Group wants to achieve global sales of 17 billion euros and a sustainable operating margin of 11 percent.
The adidas brand will continue to be the growth engine of the group with projected sales of 12.8 billion euros in 2015. This is 5 percent higher than the original target of 12.2 billion euros announced in November 2010.
Herbert Hainer, adidas Group CEO, said, "We have made great progress since we introduced our Route 2015 ambitions in November 2010...While the first two years of our execution were marked by exceptional sales momentum we will now focus and deliver even stronger on improving the profitability of our Group."
Further, adidas said Reebok's 2015 sales target has been reduced to 2 billion euros from 3 billion euros owing to the decision not to renew the previous National Football League license, a change in reporting of NHL-related license sales and the group's focus on margin and operational efficiency.
Adidas had announced in April that some commercial irregularities were discovered at Reebok India Co. in India, would likely affect the consolidated financial statements of the adidas Group.
The company will continue to position Reebok as the fitness brand that caters to all major fitness categories. The global marketing organization of Reebok will now be organized in Business Units that build products and concepts for the fitness categories and for Classics.
The adidas Sport Performance sales target is now 8.9 billion euros, up from 8.5 billion euros, supported by record-breaking football sales, good momentum in basketball and an unprecedented product pipeline in running.
adidas Sport Style is expected to grow to 3.9 billion euros, up from 3.7 billion euros, due to the global resonance of Originals with the lifestyle consumer and solid momentum in the adidas NEO label.
Based on the outstanding performance of TaylorMade-adidas Golf, Other Businesses that include TaylorMade-adidas Golf, Rockport and Reebok-CCM Hockey, will achieve their Route 2015 goals in 2012 itself. They are now expected to contribute 2.2 billion euros, up from 1.8 billion euros, in sales by 2015.
The group's three key markets are North America, Greater China as well as Russia/CIS. These are expected to contribute 50 percent of the firm's sales growth within the strategic business plan Route 2015. In North America, the company has almost doubled its market share in the last three years.
Adidas settled in Frankfurt on Thursday at 65.59 euros, up from the prior close of 65.41 euros, on 786,337 shares.
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