Adidas Sees 34% Q1 Profit Slip; Brand Seeks To Unload Rockport
adidas' Q1 net profit “plunged because of unfavorable currency effects and weakness at its TaylorMade-Adidas Golf business,” according to Neetha Mahadevan of the WALL STREET JOURNAL. Net profit “fell 34%” to $283.2M, while sales “fell 6%” to $4.92B. adidas “attributed the decline in sales to continued weakness in emerging market currencies and double-digit sales declines at TaylorMade-Adidas Golf.” Sales at TaylorMade-adidas Golf “fell partly because of the company's decision to change the timing of key shipments, as well as new product launches.” Analysts had “expected a weak quarter” from adidas because of a “different phasing of World Cup-related shipments versus previous years.” New product launches are “expected only in the second quarter.” adidas “stuck to its full-year guidance based on expectations that the World Cup in Brazil later this summer will help sales growth in the second half” (WSJ.com, 5/6). The WALL STREET JOURNAL’s Mattioli & Germano cite sources as saying adidas is “looking to sell its Rockport brand.” Sources said that adidas hired Guggenheim Partners to “start pitching Rockport to potential buyers." Sources added that adidas has between $30-40M in “annual earnings before interest, taxes, depreciation and amortization.” adidas inherited the brand in ‘05, when it “agreed to buy Reebok.” A deal could “boost” adidas's coffers at a time when it has “lost global traction against rival Nike” (WALL STREET JOURNAL, 5/6).