Adidas Reports Strong Q2 Profits; Full-Year Targets Remain On Track
Adidas reported stronger-than-anticipated Q2 profits, and the company said that it "remains firmly on track to hit its full-year targets despite taking an impairment charge on its struggling Reebok brand," according to Sam Meredith of CNBC.com. Net profit over Q2 rose 20% to $484.6M, "beating analyst expectations" of $448.7M. Sales came in at $6.14B, a rise of 10% after "currency effects, and ahead of average analyst estimates for a rise" of 8%. Adidas said that it was "taking a medium triple-digit million euro impairment regarding its Reebok brand after the German Financial Reporting Enforcement Panel disagreed with how the firm calculated historical book value." Adidas said that this "retrospective accounting move would have no impact" on its full-year '18 results. Meanwhile, marketing spend increased to 13.5% of sales from 12.3%, "largely due" to the World Cup. Adidas CEO Kasper Rorsted said that the company "sold more than 8 million jerseys during this summer's soccer tournament -- though with Nike-sponsored nations dominating the final stages of the World Cup, Adidas missed out on an extra profit boost" (CNBC.com, 8/9).
AROUND THE GLOBE: Rorsted said Adidas is "very confident" it will get Reebok "into the black" by '20. He notes that "means in certain regions we are willing to take slower revenue growth or declining one." However, Rorsted said the company is "now back to growth in North America (and) Reebok grew 6% in the U.S. so we're confident that we're doing the right thing for Reebok" ("Street Signs," CNBC, 8/9). REUTERS' Emma Thomasson noted Adidas "saw sales growth in North America slow slightly" to 16%, but that was "still well ahead" of the 3% growth Nike reported for its March to May Q4, the company's "first increase in the region for a year." In greater China, Adidas sales growth accelerated to 27%, "slightly ahead" of Nike's 25%. As Adidas had "previously cautioned, sales were flat in western Europe, where Nike has been growing faster, but they jumped" 14% in Russia, which hosted the World Cup (REUTERS, 8/9).