Adidas AG will resume paying dividends to shareholders.
Today, the German sportswear giant announced that its executive board will propose paying a dividend of 3 euros per share for the 2020 fiscal year at the annual general meeting on May 12. The proposal, which is subject to approval by the supervisory board, is expected to total 585 million euros (or nearly $710 million at current exchange).
According to Adidas, the payments reflect the company’s “strengthened financial profile as well as management’s positive outlook for the current year.” The decision follows a series of financing measures taken over the past several months by the athletic brand, including obtaining strong investment-grade ratings, issuing bonds worth 1.5 billion euros and securing a new syndicated loan of 1.5 billion euros with partner banks.
Last year in April, Adidas took a 3 billion-euro syndicated revolving loan facility from the German government as it, like many brands, contended with economic uncertainties stemming from the global health crisis. As a condition, the company had to suspend dividend payments while the facility lasted. (It was permitted through July 2021.)
“The current situation poses a serious challenge even for healthy companies,” CEO Kasper Rorsted said at the time. “We are doing our utmost to protect the long-term well-being of Adidas, our 60,000 employees and our partners… Access to additional liquidity is key to weathering this crisis. We will repay any used portion of the loan, including interest and fees, as quickly as possible.”
In its most recent quarter, Adidas reported a return to growth in sales and profits but warned that a resurgence in the COVID-19 outbreak could weigh on its financial results for the next three months. For the period ended Sept. 30, its income from continuing operations amounted to 578 million euros ($682.69 million) and earnings per share were 2.80 euros ($3.31), compared with the prior year’s profits of 644 million euros and EPS of 3.26 euros. Revenues, on the other hand, decreased 7% to 5.96 billion euros ($7.04 billion).
Overall, the Three Stripes’ top line in the fourth quarter is forecasted to decline in the low to mid-single digits. its operating profit is anticipated to be between 100 million and 200 million euros — assuming no more major lockdowns, a store opening rate of higher than 90% and no further “material slowdown” of global foot traffic at its locations.