Adidas Upbeat Amid Challenges at Reebok

NEW YORK — Adidas AG remains laser-focused on growth over the next two years, even as it registered a fourth-quarter loss dragged down by struggles at Reebok.

The Herzogenaurach, Germany-based company said revenues are expected to increase at a mid-single-digit percentage pace in 2013, with more of the growth weighted toward the back half. Earnings per share are expected to rise between 12 percent and 16 percent from 2012.

“Despite the macroeconomic pressures, we will continue our upward trajectory in 2013 and for the remainder of our ‘Route 2015’ plan,” Adidas CEO Herbert Hainer told analysts on a conference call last Thursday.

In footwear, Adidas is introducing at least two new products: the Energy Boost and Springblade running shoes. According to Hainer, the Energy Boost, which launched at retail earlier this month, “is already the talk of the trade, seeing high levels of engagement [more so than] any running product we have ever brought to market before.”

At Reebok, which reduced its growth projections, several new footwear launches are in the works throughout 2013, including three new platforms in running, such as the Satellite and ATV.

Analysts were optimistic on Adidas’ upcoming progress, as the firm’s shares closed 6.6 percent higher in the Frankfurt bourse last Thursday.

“We stick to our view that earnings improvement could be higher in 2013,” Michael Kuhn, an analyst at Deutsche Bank AG, wrote in a research report.

Christopher Svezia, analyst at Susquehanna Financial, also wrote in a report that while top-line growth in the first half of 2013 will be more difficult due to foreign exchange headwinds, there is more upside potential in the second half.

“Overall, we believe the company is more focused on profitable growth and managing inventory well in a non-event year. Product launches from Adidas, a Reebok recovery and continued solid growth from TaylorMade will drive the top line,” he stated.

Globally, Adidas is most bullish on China and Russia, although all markets registered growth in 2012.

Hainer dismissed plans for acquisitions this year, “because I definitely do believe that we have still enough work to do with our Reebok brand. And we also do believe that we have enough potential with all our three brands. We want to give the money back to the shareholders within our guidance of 20 percent to 40 percent. We are now at 35.7 percent.”

Adidas swung into the red in the fourth quarter, recording a net loss totaling 273 million euros, or $357.9 million at current exchange, attributable to a goodwill impairment of 265 million euros, or $347.4 million.

Sales in the three-month period rose 1 percent, currency-neutral, to 3.37 billion euros, or $4.42 billion, buoyed mainly by greater China and other Asian markets, European emerging markets, as well as Latin America.

For the full year, EPS came in at 2.52 euros, or $3.30, a decrease of 14 percent from 2011. Currency-neutral sales advanced 6 percent to 14.9 billion euros, or $19.5 billion.

The group managed inventories well, as they were up only 1 percent currency-neutral at year’s end.

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