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SBD Global/May 6, 2013/Finance

Adidas Profit Margin Hits Record High Following Launch Of New Adidas Boost Sneaker

Germany's adidas posted its highest-ever gross profit margin "as the sale of higher-priced products through its own stores and a new running shoe helped offset weak consumer spending in Europe and problems at Reebok," according to Victoria Bryan of REUTERS. Despite a 2% fall in sales in the first quarter, "with fewer big sporting events than the year before," operating profit at the world's second-largest sports apparel maker behind Nike rose by a greater-than-expected 8% to €442M ($578M). The group said that its new Boost running shoes, priced at around $150 a pair, "had almost completely sold out in several countries in the first four weeks of sales and that it was struggling to keep up with demand." Adidas CEO Herbert Hainer told analysts on Friday, "Unfortunately we don't have enough supply at the moment." Adidas shares jumped 7.5% to a record high of €85.63 ($112.25) after it said its gross profit margin had widened 2.4% points to 50.1%, "the second time it has ever reported a figure above" 50%. The higher profits overshadowed a slight cut in the sales growth forecast for its Reebok-CCM division, "which combines shoe, clothing and fitness brand Reebok and hockey brand CCM." The group now estimates that the business "will see sales grow" by less than 10% in '13 (REUTERS, 5/3). DEUTSCHE WELLE reported adidas said demand in Eastern Europe, Asia and North America had been especially strong in the first quarter, "making up for weaker markets in Western Europe." Moreover, adidas's newest "TaylorMade" golf equipment series "grew at a double-digit rate between January and March" (DEUTSCHE WELLE, 5/3).
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