Adidas Banks on Reebok

Adidas Banks on Reebok
An image from Reebok’s EasyTone advertising campaign.

BOSTON — Adidas Group plans to lean, in part, on its improving Reebok brand to carry the company out of the economic doldrums.

With a roughly doubled per-pair sales expectation for Reebok EasyTone product this year, Adidas last week slightly lifted its full-year revenue guidance. It also said it was encouraged by a successful launch of Reebok ZigTech, confidence in its sport-style segment and the upcoming FIFA World Cup, which should fuel the athletic category. The firm now predicts revenues will increase in the mid-single digits versus a prior low- to mid-single-digit expectation. Adidas also reiterated a previously revised annual earnings-per-share guidance for 2.05 to 2.30 euros.

“After the hard work of last year to reshape our organization, we began 2010 with confidence and the full belief that our product and marketing strategies will make a real difference in the improving economic environment,” Adidas Group CEO Herbert Hainer said last week on the firm’s post-earnings conference call. “As we looked out, the strengths and power of our brands were visible in every playing field in the first quarter.”

At Reebok, where in the first quarter worldwide sales rose 1 percent on a currency-neutral basis, sales in North America spiked 6 percent, led by toning.

“The explosion of growth in this [toning] space in such a short period of time eclipses nearly everything I have witnessed in the industry over the last 25 years,” said Hainer. “And we are well on track to sell at least 5 million pairs of toning footwear in the U.S. alone this year.”

Worldwide, Hainer forecast that as many as 10 million pairs of toning product could be sold, up from a prior forecast for 5 million pairs. Indeed, internationally, the Reebok toning product is gaining traction, said Hainer, given recent advertising launches in Germany, Russia and the U.K.

Another recent Reebok product launch, ZigTech, which hit stores in March, is also expected to boost Reebok sales this year. Hainer estimated that the company “will easily sell over one million pairs of this shoe in the U.S. in 2010.”

Adidas Group reported last Tuesday that net income spiked to 169 million euros, or $234.2 million (calculated at average exchange), from 4 million euros a year ago. On an EPS basis, the firm posted a profit of .80 euros, up from .04 euros the prior year.

Net sales in the quarter rose 4 percent to 2.67 billion euros, or $3.71 billion. Retail sales totaled 459 million euros, or $634 million, an increase of 15 percent, while wholesale revenues inched up 1 percent to 1.9 billion euros, or $2.63 billion.

By division, Adidas brand sales increased 4 percent to 2 billion euros, or $2.77 billion, while Reebok sales totaled 376 million euros, or $521 million.

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