Adidas Hits Record High In Trading After Beating Q1 Forecasts
Adidas shares have "hit a record high" on the Frankfurt Stock Exchange after the company "beat first quarter profit forecasts despite a slowdown in sales growth," according to CNBC's Willem Marx ("Street Signs," CNBC, 5/3). BLOOMBERG NEWS' Tim Loh reports Adidas "benefited from double-digit growth in China in the first quarter, which pushed the proportion of sales from the Asia-Pacific region to more than a third," while e-commerce revenue gained 40%. That helped Adidas CEO Kasper Rorsted "improve margins and maintain 2020 targets even as demand shrinks at home and supply-chain problems curb growth in North America" (BLOOMBERG NEWS, 5/3). The FINANCIAL TIMES' Olaf Storbeck notes Adidas’ Q1 profits "beat analysts’ expectations" by about 10% despite the sportswear maker "missing its own growth target as it failed to meet rising U.S. demand." Adjusted sales growth in North America, which "accounts for a fifth" of Adidas' overall revenue, "cooled" to 3%, compared with a 17% increase last year. Q1 adjusted sales were up 4% year-over-year to $6.59B, "short of the medium-term target" of 10-12% annual growth. Still, Adidas' profitability "beat forecasts," as operating profit rose 17% to $977M, compared with an average forecast of $886M (FT.com, 5/3).
CONTINENTAL DRIFT: Rorsted said the company in the U.S. is "in a situation where the demand is higher than the supply." Rorsted: "We should have managed that better, but still a better situation to be in than the reverse that the supply is bigger than the demand" ("Street Signs," CNBC, 5/3). Rorsted predicted the American market "will continue to grow." Meanwhile, he ascribed some of the lack of growth in a "subdued" European market to the "negative impact" of the ongoing Brexit talks. He also attributed some of the "lack of growth we're seeing in Europe ... to some of the misdoings on our side." He predicted there will not be many "high growth rates in Europe moving forward simply because the overall economy in Europe is growing at a very, very low rate" ("Squawk on the Street," CNBC, 5/3).