Adidas Forecasts Hit From Emerging Market Currency Swings In '14-15
Adidas on Wednesday warned that weakening emerging market currencies, notably the Russian ruble, "would hurt 2014 results and pose a risk to its 2015 targets even as sales are helped" by the World Cup, according to Emma Thomasson of REUTERS. Adidas, "which has been losing ground to market leader Nike, makes about half of its sales in fast-growing emerging markets, where currencies have been sliding in recent months." Adidas CEO Herbert Hainer said, "The currency situation represents a significant risk to the achievement of our goals. We cannot ignore the significant weakness of the Russian ruble since the beginning of the year as well as the current uncertainty in the region, both of which have added considerable risk to our results in euros." For '14, adidas expects the World Cup, exposure to emerging markets and the expansion of its retail business "to help currency-neutral sales grow at a high single-digit rate, accelerating from a rise of 3 percent in 2013." But it forecast that foreign exchange effects "will have a mid single-digit percentage point hit to sales growth and cut operating profit" by €150M-€250M ($206M-$343M) (REUTERS, 3/5).