By Paul Nicholson
November 7 – FIFA sponsor Adidas reported a third quarter drop in net profit by 8.1% to €316 million, with sales down 7% to €3.88 billion and operating profit down 6% to €463 million. But the sporting goods and appareil giant said that this was pretty much in line with expectations and analysts are expecting a bumper World Cup year in 2014.
With Adidas being an exclusive FIFA partner as well as sponsoring World Cup contenders Spain, Argentina and Germany, many brokers are recommending this is the time to be buying Adidas shares – some predictions expect Adidas share price to rise by at least 30% over the next 12 to 18 months.
The company is not currently paying a shareholder dividend, unlike its fierce rivals Nike.
2013 was always going to be a slower year for Adidas after the peaks of the London Olympics and European Championships in 2012. The company said that it expected a slight increase in sales and an operating margin of 8.5%.
The World Cup is predicted to provide a massive revenue boost in the region of $2.7 billion for its football-related sales.
Adidas has experienced slower sales in its European markets but is making significant progress in China and is expected to grow further in this market. The rise in share price of 16% over the past year is largely attributed to its Chinese business and prospects.
Adidas bought Reebok for $3.8 billion in 2006 but since then the brand has continued to struggle. Now the company is implementing a new branding strategy based on Reebok’s CrossFit logo becoming the symbol for the label. Reebok’s CrossFit fitness lifestyle brand saw a 13% rise in revenues during the first quarter of 2013.
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