Adidas Confirms Strong Q2 Results As U.S. Gains Steam

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Adidas Crazylight 2016 PE for James Harden.
Courtesy of Adidas.

PARISAdidas AG said on Thursday it is gaining steam in the U.S. market, as the German sporting goods maker confirmed its strong momentum in the second quarter.

Sales in currency-neutral terms grew 25.6 percent in North America in the three months ended June 30, compared with growth of 21.6 percent in the first quarter, the company said. Revenues in Western Europe advanced 29.2 percent, while Greater China was the fastest-growing region with a 30.1 percent jump.

Sales in Latin America and Russia/CIS fell in reported terms, but top-line growth accelerated by 7.9 percent and 7.2 percent, respectively.

“The stellar financial performance in the second quarter is proof positive that our strategy is paying off,” said Herbert Hainer, chief executive officer of Adidas. “I am proud to confirm that we are in great shape. 2016 will be a year of records for the Adidas Group.”

The executive is set to hand the baton to his successor, Kaspar Rorsted, on Oct. 1.

Adidas confirmed its preliminary results, released last week, saying group revenues in the quarter totaled 4.4 billion euros, or $4.95 billion, up 13 percent in reported terms and 21 percent on a constant-exchange basis.

The maker of Stan Smith and Yeezy sneakers lifted its guidance for 2016 on the back of the strong results, which widely beat analysts’ consensus estimates.

As reported, net income from continuing operations increased 99 percent to 291 million euros, or $327.2 million, while group operating profit gained 77 percent to 414 million euros, or $465.5 million, lifted by the early termination in May of its sponsorship of Chelsea Football Club.

Dollar figures are calculated at average exchange for the period to which they refer.

The company expects its net income from continuing operations to increase between 35 percent and 39 percent to a level of between 975 million euros and 1 billion euros, or $1.09 billion to $1.12 billion at current exchange, up from a previous guidance of a rise of around 25 percent.

The group now expects a gross margin between 48.0 percent and 48.3 percent, versus 48.3 percent last year, compared with a previous forecast for a 50 basis-point decline. Despite increased sourcing costs in Asia, Adidas expects to benefit from a more favorable pricing, product and regional mix, in addition to higher product margins atTaylorMade-Adidas Golf.

Its operating margin is projected to increase up to 7.5 percent, versus a former projection of about 7 percent. Sales in currency-neutral terms are forecast to grow in the high teens, against a prior projection of about 15 percent.