Rorsted said Adidas' biggest struggle will be meeting strong demand for its mid-priced apparelGETTY IMAGES
Adidas saw a record-year in '18 for sales, but CEO Kasper Rorsted expects "supply chain issues to constrain U.S. growth" in the first half of '19, according to Chloe Taylor of CNBC.com. The sportswear brand’s net profit reached $122M in '18, "surpassing analysts’ expectations" of $99M. Q4 sales rose by 5% to $5.9B, also "exceeding expected figures." Rorsted said that the company "grew its online business" by 36%. He said overall it was "by far the best year in the history of our company." Taylor notes Adidas' biggest struggle will be "meeting strong demand for its mid-priced apparel." However, Rorsted said that Adidas had "no intention of hiking prices to offset the problem" (CNBC.com, 3/13).
ACROSS THE POND: BLOOMBERG NEWS' Tim Loh notes Adidas' challenges are "most apparent in Europe," which accounted for about 23% of sales in Q4 and "slumped overall" in '18. The company expects to see a "slight increase" in sales this year, adjusted for currency swings (BLOOMBERG NEWS, 3/13). Rorsted said that Adidas had "relied too much in Europe on a short-term trend for fashion shoes, like its retro Stan Smith and Superstar," with global sales of those models down over $500M in '18 from the previous year. To recover in Europe, Rorsted said that the company is "investing heavily in marketing, including with sponsorship deals" like the one it struck with EPL club Arsenal. Rorsted: "We will continue to invest heavily in sports. We want to be the best sports company in the world, not the best fashion company" (REUTERS, 3/13).
FAIR WARNING: The FINANCIAL TIMES' Olaf Storbeck notes Adidas today "warned investors it will miss its growth target" in '19 as supply chain woes "dent sales in the first half of this year when it will be unable to produce as many shoes and apparel as it could sell." Adidas expects that the supply chain problems will "lower revenue growth by 1 and 2 percentage points, forecasting a currency-neutral increase for the full year" of 5-8%. Over the first six months, the "growth rate will be about half that, with Adidas expecting it to accelerate in the third and fourth quarter" (FT.com, 3/13). CNBC’s Sara Eisen said Adidas is “doing well in North America,” but for basketball shoe sales, it is "important who gets Zion.” That is because Adidas endorser and Rockets G James Harden “doesn't sell basketball sneakers the way LeBron James and Kevin Durant do” (“Squawk on the Street,” CNBC, 3/13).
