Nov 9, 2017
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Adidas speeds ahead in China, North America; slows in Europe

Nov 9, 2017

German sportswear firm Adidas reported another strong quarter of growth in China and North America as it takes market share from rivals such as Nike, but its shares dipped as growth slowed in Europe and it stuck to its full-year outlook.

Adidas and local rival Puma have been gaining market share in North America - Archiv

Some investors had been expecting that Adidas might lift its forecasts for 2017 after smaller German brand Puma  last month increased its targets for the year.

But Adidas, which had already raised its 2017 outlook in July and lifted its long-term forecast in March, confirmed it expects 2017 currency-neutral sales to rise between 17 and 19 percent and net income to increase at between 26 and 28 percent.

Adidas shares, which are up more than a third this year, were down 2.2 percent by 0900 GMT to their lowest level in almost four months, making them one of the biggest decliners on Germany’s blue chip index .GDAX.

“Adidas is catching up again in the hard-fought U.S. market and showed strong growth in contrast to its main competitors Nike and Under Armour,” wrote analysts at NFS Capital.

“On the other hand, growth in Europe has significantly weakened.”

Adidas and local rival Puma have been gaining market share in North America as customers snap up their retro styles and lifestyle shoes instead of basketball and sports performance gear, hurting Nike and Under Armour.

Nike posted its slowest quarterly sales growth in nearly seven years in September, while Under Armour slashed 2017 sales and profit forecasts last month and reported its first year-on-year fall in revenue in the third quarter.

For Adidas, third-quarter sales rose 9 percent to 5.677 billion euros ($6.59 billion), while net profit jumped more than a third to 526 million euros. That compared with average analyst forecasts for 5.86 billion and 512 million euros respectively.

The Adidas share of the U.S. market for running footwear jumped more than three quarters to 16 percent in August, according to market intelligence firm NPD, while Nike’s share slipped 14 percent to 56 percent.

Sales of the Adidas and Reebok brands rose 28 percent in greater China and 23 percent in North America, after stripping out currency effects, but by just 7 percent in western Europe, down from 19 percent in the second quarter.

Sales fell 17 percent in Russia, which Adidas blamed on the “ongoing challenging consumer sentiment” and store closures.

Adidas saw double-digit sales increases in its running and outdoor categories as well as at its Originals and Neo fashion labels, but said revenues fell from soccer and basketball, mainly due to the termination of two major sponsorship deals.

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