Adidas highlighted signs of revival at its troubled Reebok brand as the German sporting goods group announced improved first-quarter results ahead of the football World Cup.

Adidas Q1 results
SalesNet profitEarnings per shareDividend
€2.7bn€168m€0.80-
↑ 4%€4m€0.04-


A turnround at Reebok, acquired by Adidas in 2005, was “gathering pace”, said Herbert Hainer, chief executive, with a 6 per cent sales increase in the US – led by shoe sales – and a 1 per cent increase overall. US sales would “grow in double digits in the US this year”, Mr Hainer said.

Mr Hainer added that there was “more confidence round the world” from consumers. “We are now more optimistic – but let’s be quite honest, there are still clouds . . .we still have to be careful how things develop,” he said.

Adidas had already forecast a record year for sales of football goods – to be driven by the World Cup – and last month the company raised earnings expectations for 2010 on the basis of the first-quarter performance. It said on Tuesday it expected a slightly higher gross margin and operating margin in 2010 compared with last year.

Net income rose from €4m a year ago to €168m ($220m) while sales increased 4 per cent to a first-quarter record of €2.7bn. Retail sales rose 15 per cent but wholesale revenues – a much larger part of the business – were only 1 per cent ahead.

Gross margin for Reebok, which accounts for about 14 per cent of sales, improved by 900 basis points to 36.3 per cent, compared with a group gross margin of 48.6 per cent, in the first quarter. Robin Stalker, chief financial officer, said any further improvements would “not be at a higher rate than we have seen in the first quarter”. This year Adidas stopped publishing profitability figures for its individual brands.

Adidas also expects a “modest” decrease in operating expenses this year in spite of increasing its sales and marketing effort for the World Cup, which starts next month in South Africa.

Shares in Adidas, Europe’s biggest sporting goods group, fell 2 per cent to €44.34 on Tuesday morning in Frankfurt.

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