3rd UPDATE: Adidas 3Q Net -30%; Cautiously Optimistic On 2010
By Natascha Divac, Of DOW JONES NEWSWIRES
(Adds detail.)
FRANKFURT -(Dow Jones)- German sportswear and equipment maker Adidas AG (
ADS.XE) Wednesday painted a cautiously upbeat picture for 2010, the year of the
soccer World Cup in South Africa, as it stuck to its 2009 outlook despite
reporting a 30% fall in third-quarter net profit, a decline largely forecast by
analysts.
Adidas, the world's second-largest sports good maker after Nike Inc. (NKE) by
sales, has been hurt by the downturn in consumer spending. Its quarterly figures
were also hit by rising input costs and by the Russian ruble's decline in value
against the euro. Russia is one of the group's most important markets.
"Consumer and retailer sentiment still hovers between fear and optimism,"
Chief Executive Herbert Hainer said.
While it's still too early to give detailed guidance for 2010, the CEO did say
he is "cautiously optimistic" about next year's prospects.
Rival Nike voiced a similar message when it released quarterly results on
Sept. 29, while stressing that it doesn't expect a quick recovery from the
global sales slump.
One bright spot for sportswear and apparels makers is next summer's FIFA World
Cup South Africa. A total of 32 countries are expected to take part in the
championship, which should fuel interest in soccer-related items.
"With a firm grip on inventories, a better financial position and a leaner
organization, we turn into the 2010 event year with innovative products,
exciting concepts and clear focus on the tasks at hand," Adidas CEO Hainer said.
Investors liked the German group's update. At 1355 GMT, the stock was up 3.7%
at EUR33.83. Adidas' share price has gained around 17% since the start of the
year.
The company, which produces the Adidas and Reebok sports brands and TaylorMade
golf equipment, said its gross margin fell 3.7 percentage points to 45.3% in the
third quarter. As a result, its operating margin decreased 3.7 percentage points
to 11.6%. Operating profit fell 29% to EUR336 million, below analyst
expectations of EUR341 million.
Adidas still expects a low- to mid-single-digit percentage drop in currency-
neutral sales, as well as a decline in net profit and earnings per share citing
weak consumer spending and rising job uncertainty in many of its major markets.
Gross margin for 2009 as a whole is forecast to decline to a level of between
45% and 45.5%, the company said.
Talking about general economic conditions, CEO Hainer said he still expects "
rough waters" in the next six to 12 months. However, this season's Christmas
shopping should be somewhat better than last year.
The sportswear maker slightly lowered its guidance for golf equipment unit
TaylorMade, citing "tough conditions" in the U.S. The unit is now expected to
post a sales decline at a low- to mid-single digit percentage rate.
The group's third-quarter net profit fell to EUR213 million from EUR302
million in the same period a year ago, roughly in line with analyst expectations
of EUR211 million.
Diluted earnings per share fell 29% to EUR1.03.
Adidas said that third-quarter sales fell to EUR2.89 billion from EUR3.08
billion a year earlier. Analysts expected EUR2.93 billion.
Merck Finck analyst Robert Greil, said Adidas' third-quarter sales were
disappointing while the earnings were in line with forecasts. Greil is sticking
with his buy rating on the stock and expects a positive earnings trend for the
fourth quarter.
Besides Nike Inc., Adidas also competes with German rival Puma AG Rudolph
Dassler Sport (PUM.XE). Puma is set to report third-quarter results Monday.
-By Natascha Divac, Dow Jones Newswires; +49 69 29725 500; natascha.divac@
dowjones.com
(Natali Schwab contributed to this article.)
(END) Dow Jones Newswires
11-04-090932ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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