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Aug 8, 2013
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Adidas cuts sales outlook on currency moves

By
Reuters
Published
Aug 8, 2013

FRANKFURT, Germany - German sporting goods firm Adidas cut its sales forecast for 2013 after adverse currency moves and lacklustre European trading took their toll in the second quarter.

The world's second largest maker of sportswear after Nike said it now expected group sales to rise by a low to mid single-digit percentage in 2013, compared with previous guidance for a mid single-digit rate.

"The lacklustre trading environment in Europe and the unfavourable development of several currencies versus the euro indicate that the group's goals for the full year will be more challenging to reach than when initially announced," Adidas said on Thursday.

Like rival Puma, analysts were expecting the results to show the effects of a weakening Japanese yen and British pound against the euro, so the sales target reduction did not necessarily come as a surprise.

"However, market estimates for Adidas are high, and the market has been spoilt in the past because Adidas normally doesn't just meet targets, but exceeds them," Metzler analyst Sebastian Frericks told Reuters.

Shares in Adidas, which hit an all-time high of 86.87 euros this week, dropped by 3.2 percent at the open, the biggest fall on the DAX index of leading German stocks.

Frericks said it was important, though, that Adidas had maintained its forecasts for an operating margin of near 9 percent in 2013 and for earnings per share to rise by 12-16 percent to 4.25-4.40 euros.

For the second quarter Adidas reported sales of 3.38 billion euros ($4.5 billion), down a greater than expected 4 percent, and operating profit of 252 million, compared with expectations for 261 million.

Adjusted for currency effects, sales would have remained stable at around 3.5 billion euros.

Sales in western Europe fell 11 percent on a currency-neutral basis. Last year, Adidas benefited from the sale of products related to the European soccer championships and the London Olympics.

The company's Reebok brand, however, returned to growth in the quarter with sales increasing 11 percent on a currency-neutral basis.

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