REPORT_ Adidas Group reported retail sales increase of 22 percent on currency-neutral with comparable store sales up 8 percent. In the first quarter of 2014, group revenues decreased 6 percent to 3.533 billion euros (4.904 billion dollars). Currency-neutral Wholesale revenues increased 1 percent due to growth at adidas.
Revenues in other businesses were down 27 percent on a currency-neutral basis, due to double-digit sales declines at TaylorMade-adidas Golf. Currency-neutral revenues at Rockport also decreased, while sales at Reebok-CCM Hockey grew versus the prior year. Currency translation effects had a negative impact on segmental sales in euro terms. Wholesale revenues decreased 5 percent in the first quarter of 2014. Retail sales rose 10 percent compared to the prior year. Sales in other businesses declined 30 percent.
“Our financial results for the first quarter reflect the challenging start to 2014 which we had expected,” commented Herbert Hainer, Adidas Group CEO, adding, “Strong performances particularly in the emerging markets and in our own retail were masked by strategic changes to how we go to market at TaylorMade-adidas Golf as well as adverse currency effects. Looking in depth through our results, however, there are many positive underlying trends. Therefore, we can look forward to an accelerated period of growth and momentum for our group for the remainder of 2014.”
Group operating profit declined 31 percent in the first quarter of 2014. The operating margin of the adidas Group decreased 3.2 percentage points to 8.6 percent. The majority of the decline in operating profit is related to a lower contribution from TaylorMade-adidas Golf as well as the adverse impacts from negative currency movements. In euro terms, other operating expenses increased 2 percent, as a result of higher expenditure related to the expansion of the group’s own-retail activities as well as an increase in sales working budget expenditure.
In the first quarter of 2014, basic earnings per share decreased 34 percent to 0.98 euros (1.36 dollars) versus 1.47 euros (2.04 dollars) in the prior year. Diluted earnings per share decreased 35 percent to 0.96 euros (1.33 dollars) from 1.47 euros (2.04 dollars) in the prior year.
In 2014, the Herzogenaurach headquartered group’s other operating expenses as a percentage of sales are expected to be around the prior year level at 42.3 percent in 2013. Further, the Group will support Reebok’s growth strategy in key fitness categories, leveraging partnership assets such as CrossFit, Spartan Race and Les Mills. In 2014, the operating margin for the Adidas Group is forecasted to be at a level between 8.5 percent and 9 percent and basic earnings per share of between 3.97 euros (5.51 dollars) and 4.45 euros (6.18 dollars).
Commenting on the forecast, Herbert Hainer stated, “While we still have to be wary of currencies and their effects on our financials, I expect a strong second quarter to point the way forward to a sustained period of growth and momentum for our group. Later this month, we will unleash our largest football offensive ever ahead of the 2014 FIFA World Cup.”