Adidas Surges After China Sales Drove 1Q Consensus Beat -- Earnings Review
By Joshua Kirby
Adidas AG posted first-quarter sales above consensus Friday,
triggering a rise in its share price. At 0835 GMT, shares in the
German sporting-goods company traded 8% higher at EUR279.50. Here's
what we watched:
SALES: Quarterly sales came in at 5.27 billion euros ($6.36
billion), up 27% at constant currency from EUR4.38 billion in the
first quarter of 2020. Analysts had expected sales of EUR5 billion,
according to FactSet.
OPERATING PROFIT: Earnings before interest and taxes stood at
EUR704 million, up more than tenfold compared with the same period
the previous year, and well ahead of FactSet-compiled consensus
expectations of EUR575 million.
WHAT WE WATCHED:
-CHINA POSITIVES: Sales in greater China rocketed in the
quarter, increasing by 156% to EUR1.40 billion, though with an easy
comparison base against 2020's pandemic-hit first quarter.
-CHINA NEGATIVES: Adidas didn't allude to any potential negative
effect from a consumer boycott in China relating to its stance on
cotton produced in the Xinjiang region. However, an upgrade to
organic-growth guidance suggests management is not expecting any
material drag from the issue, analysts at Jefferies say. The issue
is likely to be raised at a conference call later Friday.
-MARGIN CALL: Adidas's gross margin increased by 2.1 percentage
points to 51.8%, close to 2019's full-year figure. The margin was
boosted by lower sourcing costs and favorable channel and market
mix, the company said.
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(END) Dow Jones Newswires
May 07, 2021 04:54 ET (08:54 GMT)
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