SBD/November 9, 2012/Finance

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  • Adidas Lowers '12 Sales Forecast As Reebok Brand Continues To Struggle

    adidas has so far had a "strong year as sponsorships of teams and individuals at big sporting events helped drive up sales and profit," but the company on Thursday "cut its sales forecast for 2012 because of further problems at Reebok," according to Nicky Redl of the WALL STREET JOURNAL. adidas acquired Reebok in '06, and has "struggled to power the brand ever since." Reebok currently is "being hit by a player lockout in the National Hockey League and is continuing to sort out problems in India after 'commercial irregularities' were discovered." Reebok's "woes mean that while Adidas is competing strongly against Nike in Europe, Asia and fast-growing markets such as China and Latin America, it is losing ground in the U.S." Sales "fell 4.7% in the U.S. in the third quarter, predominantly because of Reebok's poor performance." adidas said that it "now expects group sales to rise by a high single-digit rate in 2012, compared with its previous forecast for a rate approaching 10%." Net profit "rose 14% on the year in the third quarter" to US$437.6M as "sales rose 11%" to US$5.3B, buoyed by "strong demand in Asia and Eastern European markets." Several attempts to "reinvent and reposition Reebok to take advantage of the U.S. market have failed to work." The latest plan is "to market Reebok as a fitness-only brand." adidas CEO Herbert Hainer said that the Reebok brand's "performance was 'by no means satisfactory,' but pointed out the sales fall was an improvement from the second-quarter decline of 10%" (WALL STREET JOURNAL, 11/9). REUTERS' Victoria Bryan noted adidas has "performed better than rivals Nike and Puma this year, taking market share in hotly contested countries such as China." The one "black mark on its record has been Reebok, whose sales fell 25% in the third quarter, following a 26% fall in the second quarter." However, Hainer "predicted a return to sales growth for Reebok in 2013 and said he was seeing the first signs of success with its Classics and children's ranges" (REUTERS, 11/8).

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  • ESPN Helps Disney To Robust Q4 Growth, But Company Misses Expectations

    Disney on Thursday “reported robust fourth-quarter growth,” while ESPN -- “as usual -- gave the entertainment conglomerate its biggest boost,” according to Brooks Barnes of the N.Y. TIMES. The operating income of Disney’s "cable television division, centered on ESPN and Disney Channel," climbed 9% to $1.38B. The growth was “powered by higher fees that cable providers paid for ESPN, as well as decreased marketing costs.” Disney CFO James Rasulo “took the unusual step of highlighting a number of difficulties in the coming quarter.” He said that ESPN will “most likely record a $170 million increase in programming costs tied to football and baseball” (N.Y. TIMES, 11/9). In N.Y., Paul Tharp notes that despite the growth, Disney “fell short of revenue expectations after weaker ad sales and lower film revenue weighed on results.” The London Olympics on NBC “diverted ratings and ad dollars from its flagship ABC network.” Ad sales also were “flat at ESPN as a result of the games” (N.Y. POST, 11/9). Shares of Disney were trading at $47.18 at presstime, down 5.72% from the close of business yesterday (THE DAILY).

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