adidas Shares See Biggest Drop In Six Months As Q1 Profit Dips
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Hainer Says Adidas Will Cut Regional HQs
In Asia And Europe And Close Some Stores |
adidas AG said that Q1 profit was "almost wiped out on slumping demand and costs to restructure the company's Reebok brand, prompting the shares' biggest drop in six months," according to Shannon & Elfes of BLOOMBERG NEWS. adidas posted an operating profit of US$77.7M for Q1, down 79% from US$377.6M in the year-ago period, "missing the [US$125.9M] estimate of seven analysts surveyed by Bloomberg." Net income fell 97% to US$6.69M, or $0.04 a share, from US$226.3M, or $0.79 a share, in the year-ago period. Sales for the company fell 2% to US$3.4B, or 6% "when the effects of currency moves are excluded." Sales excluding exchange rates declined 6% under the adidas brand, fell 4% under the Reebok trademark and dropped 6% for the TaylorMade-adidas Golf unit. adidas said that net debt increased from US$1.1B to US$3.9B "due to higher 'working capital requirements' and currency effects." adidas Chair & CEO Herbert Hainer said in a statement, "We've faced a number of economic and market challenges in the first quarter. The economic climate adds urgency to accelerate our plans." Hainer said that adidas will "cut regional headquarters in Asia and Europe, close some stores and 'consolidate' the company's wholesale business to reduce costs" by US$133.9M. Meanwhile, the company said earnings per share will be "around breakeven" for the first six months of '09 (BLOOMBERG NEWS, 5/5).
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