FRANKFURT-- Adidas AG said Tuesday that first-quarter net profit
surged following the improved performance of its Adidas and Reebok
brands and with sales growth in almost all of its regions,
relieving some of the pressure on the German sporting-goods
company's management.
Net profit for the three months ending March was EUR221 million
($246 million), up 8.2% from the EUR204 million reported a year
earlier. This was below analyst expectations of EUR234 million.
Adjusted for currency effects, Adidas's first quarter sales rose 9%
to EUR4.08 billion.
This quarter's earnings boost is a timely one for Adidas" Chief
Executive Herbert Hainer. The company has come under investor
pressure since it issued a string of profit warnings and had to
admit that it wouldn't meet its financial targets for 2015. Some
investors even pushed for the CEO to quit. Mr. Hainer refused to
budge. When confronted with the company's poor performance and
whether he would leave his job early, he consistently replied that
his contract runs until 2017.
Adidas reported sales growth in all regions except Russia. Sales
were up 21% in China and 11% in Western Europe. Exposure to the
tumultuous Russian market continued to eat into the company's
margins. Adidas has a strong presence in Russia, where slight sales
growth at the Reebok brand was more than offset by a decrease in
Adidas brand sales. Total group sales in Russia/CIS fell 3% in the
first quarter. Analysts have said they expect the worst hit from
the Russian ruble to be in the first quarter of this year and that
"there is relief in sight."
Sales at Adidas's golf business, TaylorMade-Adidas Golf,
continued to slide in the quarter. Some analysts had expected the
unit to be back in the black for the first time in more than a
year. Its sales fell 9%, adjusted for currency fluctuations. Adidas
has been criticized for reacting too slowly to the general decrease
in interest in golf, pushing too many products into the market and
overheating it. Mr. Hainer said earlier this year that he expected
the TaylorMade unit to "significantly" improve in 2015.
Sales in the North American region, a sore spot for Adidas in
the last decade, rose 7% on a currency-neutral basis. The company
has been struggling for years to regain its once-dominant position
in the U.S. market, falling behind newcomer Under Armour to the no.
3 spot in U.S. retail sales of sports apparel and footwear last
fall. In April last year, Adidas hired company veteran Mark King to
lead a turnaround at its North American division.
Adidas' new North American strategy includes betting up its
presence in New York and Los Angeles, focusing on U.S. sports and
running marketing campaigns every consecutive quarter for the next
three years. It also said earlier this year that it won't be
renewing its partnership with the National Basketball Association
when its contract expires in 2017.
The Reebok brand, which Adidas bought for EUR3 billion in 2006,
reported another quarter of sales growth, up a currency-neutral 9%
on the year. Although struggling to monetize the Reebok acquisition
at first, Adidas has repositioned the former NFL and NBA sponsor as
a fitness brand. Investors have been pushing for Adidas to shed its
Reebok unit and, last year, a consortium of investors said it was
looking to buy the brand. Mr. Hainer declined to comment on the bid
at the time, but said in March that selling Reebok would be
"stupid."
Adidas confirmed its guidance the full year.
Adidas will hold its general annual meeting in Fürth, Germany,
on May 7.
Write to Ellen Emmerentze Jervell at ellen.jervell@wsj.com
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