Consumer spending to lift Adidas
Berlin - Adidas, the German sport-shoe maker, forecast an increase in earnings this year as consumers spend more, making it easier to sell higher-priced goods and offset rising costs.
Net income from continuing operations will increase 10 percent to 12 percent excluding goodwill impairment, Adidas said in a statement Thursday as it reported full-year earnings that were pre-released last month.
Operating margin excluding goodwill impairment will be at least stable compared with last year’s 6.5 percent. Gross margin will narrow as much as 1 percentage point due to higher purchasing costs in Asia.
After 15 years in the job, CEO Herbert Hainer is presiding over his final annual-results press conference before passing the reins to Henkel CEO Kasper Rorsted. The new CEO, who starts in October, will need to improve Adidas’s standing in the US, where it’s slipping further behind number 1 sneaker brand Nike, and increase growth in athletics shoes, which define its brand.
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Sales will be helped by this summer’s European soccer championships, which drive sneaker and clothing sales, Adidas said. The company said Thursday it’s raising its dividend 6.7 percent to 1.60 euros a share, matching the Bloomberg forecast.
Last month, Adidas raised its sales and operating profit outlook for the year. Revenue and operating profit are set to increase at a double-digit rate, versus the single-digit rise previously forecast.
In nabbing Rorsted from Henkel, a rare cross-company hiring in Germany’s DAX Index, Adidas hopes to add more luster to its brand against Nike, which is twice its size.
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In an apparel market where women are wearing tights and running shoes to the office, he’ll also need to hold off a passel of smaller brands like Under Armour, Lululemon Athletica and Sketchers USA, which are looking to chip off pieces of Adidas’ already tenuous share.
Adidas said Wednesday it plans to add Nassef Sawiris, Egypt’s richest man, to the supervisory board as it enlarges its governing body.