By Mark Baber
August 9 – Adidas cut its sales forecast for 2013 saying it was expecting low mid-single percentage sales, down from the previous mid-single digit forecast. The downgrade was blamed on weak European trading and adverse currency movements, especially in Japan, masking the company’s high sales growth in Latin America and China and solid foundations being laid for the World Cup in 2014.
Second quarter sales came in at €3.38 billion, down from analysts’ predictions of €3.44 billion, leading to a shares drop of 3% before a recovery later in the day. Adidas are sticking to their forecast for earnings per share to rise by 12-16% over the year and for an operating margin of close to 9%.
Sales in western Europe fell 11% in the second quarter, which comes as little surprise as Adidas’ sales are strongly driven by major football tournaments and the Olympics.
Chief executive officer Herbert Hainer said: “While currency headwinds have added additional significant speed bumps to our path in 2013, from a strategic and operational perspective, we are absolutely on track.”
With Adidas enjoying 37% of the world’s soccer market, and usually beating analysts’ expectations, the company will not be happy to see the Wall Street Journal reporting “Adidas Falls Further Behind Nike” as sales in the North American market (the company’s second largest) fell 3.8% whilst those of Nike increased by 12% in the three months to May 31.
However Hainer was upbeat about the company’s prospects, saying: “Our powerful product engine, clear market share wins in key categories and the emerging markets and the excitement building ahead of the 2014 FIFA World Cup are all fuelling improving market sentiment.”
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