Adidas sales rise 13 percent in Q3, raises FY15 outlook

Adidas Group currency-neutral sales increased 13 percent in the third quarter of 2015. In euro terms, Group revenues grew 18 percent to 4.758 billion euros (5.167 billion dollars) in the third quarter of 2015 from 4.044 billion euros (4.391 billion dollars) in 2014. The company said that the result was driven by an accelerated momentum at Adidas as well as robust growth at both Reebok and TaylorMade-adidas Golf.

“Our relentless focus on the consumer is clearly paying off. The great momentum that Adidas and Reebok are enjoying across the globe proves that our products and marketing are resonating extremely well with the target audience, both in the lifestyle and the performance arena,” commented Herbert Hainer, adidas Group CEO.

Adidas, Reebok and TaylorMade report sales rise

Currency-neutral Adidas revenues grew 14 percent, driven by double-digit sales increases in Western Europe, North America, Greater China, Latin America and MEAA.

Currency-neutral Reebok sales were up 3 percent versus the prior year, with revenues more than doubling in Greater China and growing at double-digit rates in Latin America, Japan as well as MEAA. Revenues at TaylorMade-adidas Golf increased 6 percent currency- neutral, mainly due to double-digit growth in North America.

From a segmental perspective, combined currency-neutral sales of the adidas and Reebok brands grew particularly strongly in Western Europe, Greater China, Latin America and MEAA, with revenues up at double-digit rates each. Currency-neutral sales in Western Europe increased 18 percent, due to strong double-digit sales growth at Adidas and a mid-single-digit increase at Reebok. Currency-neutral sales in North America increased 6 percent. Double-digit sales increases at Adidas were partly offset by sales declines at Reebok. Greater China sales in the third quarter increased 15 percent currency-neutral, mainly as a result of continued double-digit sales growth at Adidas. In addition, revenues at Reebok more than doubled.

Russia/CIS sales decreased 7 percent currency neutral, due to sales declines at both Adidas and Reebok. This development was impacted by further store closures in the company’s own-retail network. Currency-neutral sales in Latin America were up 20 percent in the third quarter, as a result of significant double-digit sales growth at both Adidas and Reebok. Japan sales in the third quarter increased 6 percent currency-neutral, due to mid-single-digit sales growth at Adidas and double-digit sales increases at Reebok. Currency-neutral sales in MEAA increased 14 percent in the third quarter, due to double-digit sales growth at both Adidas and Reebok. Currency-neutral sales for Other Businesses grew 10 percent with sales increases at TaylorMade-adidas Golf, Reebok-CCM Hockey as well as other centrally managed businesses.

Third quarter operating margin increased 0.7 percentage points. The Group’s gross profit increased 20 percent to 2.304 billion euros (2.501 billion dollars) in the third quarter. The Group’s gross margin increased 1.0pp to 48.4 percent from 47.4 percent in the prior year. Operating profit increased 26 percent, representing an operating margin of 10.6 percent, up 0.7 percentage points from the prior year level. Net income from continuing operations grew 20 percent.

Sales increase 9 percent in the first nine months

Adidas Group currency-neutral sales increase 9 percent in the first nine months of 2015, due to double-digit growth at Adidas and mid-single-digit increases at Reebok. Group revenues grew 17 percent to 12.748 billion euros (13.843 billion dollars). Currency-neutral Adidas revenues grew 11 percent, driven by double-digit sales increases in Western Europe, Greater China, Latin America and MEAA.

Currency-neutral Reebok sales were up 6 percent versus the prior year, reflecting double-digit growth in all regions except North America and Russia/CIS. Revenues at TaylorMade-adidas Golf decreased 13 percent currency-neutral, mainly due to sales declines in North America and Western Europe. Currency-neutral sales grew in nearly all market segments.

From a segmental perspective, combined currency-neutral sales of the Adidas and Reebok brands grew in all market segments except Russia/CIS in the first nine months of 2015. Revenues in Western Europe increased 14 percent, driven by double-digit sales growth in the UK, Italy, France and Spain. Currency-neutral sales in North America increased 4 percent. Revenues in Greater China grew 18 percent on a currency-neutral basis, while currency-neutral sales in Russia/CIS declined 9 percent. In Latin America, revenues grew 12 percent on a currency-neutral basis, driven by double-digit growth in Argentina, Mexico, Chile, Peru and Colombia. In Japan, sales increased 2 percent on a currency-neutral basis.

Revenues in MEAA grew 13 percent on a currency-neutral basis, driven by double-digit growth in South Korea, the United Arab Emirates, Turkey and Australia. Revenues in Other Businesses were down 3 percent on a currency-neutral basis. Double-digit sales increases at Reebok-CCM Hockey and in other centrally managed businesses were more than offset by sales declines at TaylorMade-adidas Golf.

Gross profit for the Adidas Group increased 17 percent and gross margin increased 0.1 percentage points to 48.6 percent, driven by a more favourable pricing and channel mix at Adidas and Reebok, which more than offset higher input costs, negative currency effects as well as lower product margins at TaylorMade-adidas Golf.

Raises top- and bottom-line guidance for FY15

Due to the strong momentum at both - Adidas and Reebok, the Group now expects currency-neutral sales to increase at a high-single-digit rate in 2015. Group sales development is expected to be driven by double-digit increases in Western Europe, Greater China and MEAA. Additionally, higher sales expectations in Latin America and North America are expected to further support the Group’s revenue growth.

While in Latin America currency-neutral sales are now projected to increase at a high-single-digit rate, currency-neutral sales in North America are now expected to grow at a mid-single-digit rate. Sales at Reebok-CCM Hockey are now projected to grow at a high-single-digit rate on a currency-neutral basis. This, as well as the further expansion and improvement of controlled space initiatives, will more than offset the non-recurrence of sales related to the 2014 FIFA World Cup as well as the expected sales decline at TaylorMade-adidas Golf.