Will Adidas Continue Its Earnings Momentum In Q4?

Adidas Yeezy Boost 350 Tan
Adidas Yeezy Boost 350 in tan.
Courtesy of brand.

Adidas Group has had its share of challenges and triumphs during the past year.

Among the successes: a buzzy collaboration with Kanye West, the Yeezy Boost collection, that would bring a wave of frenzied attention to the brand; Reebok’s modest sales improvements in Q2 and Q3; and multiple, well-received releases of its Ultra Boost sneakers.

On the downside: TaylorMade-Adidas Golf continued to struggle for much of the year and CEO Herbert Hainer insinuated, in Q2, that he was considering shedding the brand. Hainer eventually confirmed, in Q3, that he would cut jobs at the division even as it saw a sales gain of 6 percent in the same quarter.

Ups and downs aside, by many accounts Adidas has been moving in the right direction in recent months. Case in point, the German sporting goods firm announced on Feb. 11 that it had raised its 2016 sales guidance. It now expects currency-neutral sales to grow at a double-digit rate this year, following better-than-expected sales and profit development in 2015.

The pre-announcement also revealed sales improvement for FY15. For the full year, net income from continuing operations advanced 12 percent to 720 million euros, or $799 million. Currency-neutral group sales rose 10 percent to 16.9 billion euros, or $18.4 billion, driven by double-digit sales growth in Western Europe, Greater China and Latin America as well as the Middle East, Africa and Asia region. Adidas brand sales grew 12 percent in currency-neutral terms in the period, while Reebok closed the year with a 6 percent sales increase.

CEO Hainer, who had come under heavy criticism as Adidas began losing market share to other growing athletic brands such as Under Armour and Skechers, announced last month that he would step down from his post on Oct. 1, 2016 when newly appointed CEO Kasper Rorsted would take the reins. Rorsted will officially join Adidas in August but will work with Hainer during a two-month transition period. Hainer is stepping away from his role earlier than anticipated as the brand had originally extended his contract to the end of March 2017.

Adidas reports complete results on March 3.