Adidas cuts forecasts as sales slowed in Europe

Adidas AG cut its 2013 forecasts because of declining sales in Europe and unfavorable currency impacts after reporting second-quarter profit that trailed analysts’ estimates.

Adidas said full-year schedule will now be more challenging to meet. The Herzogenaurach, Germany-based sporting-goods maker expects full-year sales to rise by a “low- to mid-single-digit rate on a currency-neutral basis” from a previous forecast of “mid-single digit” percentage growth, it said today in a statement cited by Bloomberg. The shares fell 2.9% to 83.30 euros at 9:17 a.m. in Frankfurt.

Net income for the quarter soared 4.2% to 172 million euros ($230 million), compared with the 175.8 million euro average estimate of 13 analysts surveyed by Bloomberg. Sales declined 3.8% to 3.38 billion euros, compared with the 3.43 billion-euro average estimate. Excluding currency fluctuations, sales were unchanged.

Adidas follows cross-town rival Puma SE in reporting worse-than-expected sales as austerity measures weigh on consumer spending in Europe and currency fluctuations penalize growth. Adidas expects “top-line momentum” to improve in the remaining quarters of 2013 with the fourth quarter set to be “stronger than normal,” it said.

From a brand perspective, second quarter sales at Adidas remained stable on a currency-neutral basis. Sales at Reebok grew 11% excluding currency changes. Revenues in the TaylorMade-Adidas Golf segment declined 8%. Rockport sales grew 7% currency-neutral and revenues at Reebok-CCM Hockey increased 2%. Currency translation effects had a negative impact on sales in euro terms. Group revenues declined 4% to 3.383 billion euros in the second quarter of 2013 from 3.517 billion euros in 2012.

“I am pleased to report that the adidas Group has again been able to deliver record earnings per share in the first six months of 2013,” commented Herbert Hainer, Adidas Group CEO. “This is all the more impressive considering the material challenges we faced from currency headwinds, the difficult prior year comparisons related to major sporting events and the continued soft trading environment in much of Europe.”

Quarterly sales rose 6% in Greater China, 7% in other Asian markets and 21% in Latin America, Adidas said. Sales fell 2% in North America and 11% in western Europe.

Adidas attributed western Europe’s decline to higher prior year rates following the UEFA Euro 2012 soccer tournament and the London 2012 Olympic Games as well as macroeconomic challenges in the region.

The gross margin, the percentage of sales left after production costs, widened to 50.1% from 48.2% a year earlier, boosted by pricing and higher margin product and regional sales mixes, Adidas said. Analysts had forecast had 49.3% for the margin.