Technical Absorbents
Techtextil Frankfurt

Free membership

Receive our weekly Newsletter
and set tailored daily news alerts.

Fibres/​Yarns/​Fabrics

Adidas almost doubles its net income in Q2 2016

From a brand perspective, the adidas brand grew by 25%, driven by double-digit sales increases in the key performance categories.

4th August 2016

Innovation in Textiles
 |  Herzogenaurach

Sports/​Outdoor, Clothing/​Footwear

Group revenues increased by 21% on a currency-neutral basis, driven by strong momentum at both adidas and Reebok. In euro terms, Group revenues grew by 13% to EUR 4.422 billion, compared to EUR 3.907 billion for the same quarter in 2015.

“The stellar financial performance in the second quarter is proof positive that our strategy is paying off. We are putting the consumer at the heart of everything we do," commented Herbert Hainer, adidas Group CEO. “As a result, the desirability of our brands and products is greater than ever before. It is the perfect platform to drive sustainable top- and bottom-line improvements for the years to come.”

Brand growth

From a brand perspective, the adidas brand grew by 25% on a currency-neutral basis, driven by double-digit sales increases in the key performance categories running, football and training as well as at adidas Originals and adidas neo. With the exception of Russia/CIS, where revenues grew at a mid-single-digit rate, adidas recorded double-digit growth in every geography.

Revenues developed particularly strongly in the key regions North America, Greater China and Western Europe, where sales increased by 32%, 30% and 30%, respectively. Reebok revenues increased 7% during the quarter, with double-digit growth in Western Europe, Greater China, Russia/CIS and Japan.

Revenue growth

From a market segment perspective, combined currency-neutral sales of the adidas and Reebok brands grew in all segments in the second quarter of 2016, with double-digit growth rates in Western Europe, North America, Greater China, Japan and MEAA. Revenues in Western Europe increased by 29% on a currency-neutral basis, driven by the UK, Germany, Italy, Poland, France and Spain, where revenues grew at double-digit rates each.

Growth trends in North America and Greater China were equally strong, as reflected in currency-neutral sales increases of 26% and 30%, respectively. Revenues in Russia/CIS accelerated, up by 7% on a currency-neutral basis. In Latin America, revenues grew 8% on a currency-neutral basis, reflecting double-digit sales increases in markets such as Mexico, Peru, Colombia and Uruguay. In Japan, sales were up 21% on a currency-neutral basis. Currency-neutral sales in MEAA grew 14%, driven by double-digit growth in South Korea, Turkey, Australia, South Africa and Thailand.

Profitability

During the second quarter, the Group's other operating expenses increased by 12% to EUR 1.935 billion, compared to EUR 1.720 billion for the same period last year. The increase reflects higher expenditure for point-of-sale and marketing investments, as well as an increase in operating overhead costs as a result of higher sales expenditure.

As a percentage of sales, however, other operating expenses decreased by 0.3 percentage points to 43.8%, reflecting the Group's strong top-line improvement. Other operating income grew significantly to EUR 159 million from EUR 33 million in the second quarter of 2015. This development mainly reflects two extraordinary gains in the second quarter related to the early termination of the Chelsea F.C. contract, as well as the divestiture of the Mitchell & Ness business.

The Group's operating profit increased by 77% to EUR 414 million compared to EUR 234 million in the second quarter of 2015. This translates into an operating margin of 9.4%, an increase of 3.4 percentage points compared to the prior year level of 6.0%. As a consequence, the Group's net income from continuing operations increased by 97.6% to EUR 291 million.

Increased guidance for 2016

In light of the strong brand momentum and the positive financial performance in the first half of 2016, the Group has increased its 2016 financial outlook. adidas Group sales are expected to increase at a rate in the high teens on a currency-neutral basis in 2016. The top-line development will be supported by double-digit growth in all regions except Russia/CIS.

As a result of the increased top-line expectations and improved operating margin outlook, net income from continuing operations excluding goodwill impairment is now projected to increase at a rate between 35% and 39% to a level between EUR 975 million and EUR 1.0 billion.

www.adidas-group.com

Latest Reports

Business intelligence for the fibre, textiles and apparel industries: technologies, innovations, markets, investments, trade policy, sourcing, strategy...

Find out more