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adidas net income grows 20%

Net income from continuing operations was up by 20% to EUR 418 million in the second quarter of 2018.

9th August 2018

Innovation in Textiles
 |  Herzogenaurach


“We delivered another strong quarter on the back of a successful World Cup activation. Our profitable growth was once again driven by our strategic focus areas North America, Greater China and e-commerce, while we continued to invest into the desirability of our brands and the scalability of our business. With these results, we remain firmly on track to achieve our set targets for the full year 2018 and long-term until 2020,” said adidas CEO Kasper Rorsted.

Sales increase

In the second quarter, adidas revenues increased by 10%. Revenues at the adidas brand increased 12%, driven by double-digit growth in Sport Performance, on the back of double-digit growth in the training, running and football categories, as well as high-single-digit growth in Sport Inspired.

Revenues at the Reebok brand decreased by 3% as growth in Classics was more than offset by declines in the training and running categories. While revenues in the wholesale channel increased at a high-single-digit rate, direct-to-consumer sales rose at a double-digit rate with strong support from e-commerce, where revenues grew 26% in the quarter. In euro terms, the company's sales were up 4% in the second quarter to EUR 5.261 billion.

Double-digit growth

From a market segment perspective, on a currency-neutral basis, the combined sales of the adidas and Reebok brands increased in nearly all market segments. The combined sales of the adidas and Reebok brands grew particularly strongly in North America (+16%) and Asia-Pacific (+19%), the latter driven by a 27% increase in Greater China.

Revenues in Latin America (+15%) and Russia/CIS (+14%) also grew at double-digit rates. While currency-neutral sales in Emerging Markets increased by 1%, revenues in Western Europe, in line with expectations, remained flat year-over-year.

Strong performance in first half of 2018

In the first half of 2018, revenues increased by 10% on a currency-neutral basis. In euro terms, revenues grew by 3% to EUR 10.809 billion.

The company's operating profit grew by 17% to EUR 1.338 billion, representing an operating margin of 12.4%, an increase of 1.5 percentage points compared to the prior year. Net income from continuing operations grew by 19% to EUR 960 million.

Outlook for full year

For 2018, adidas continues to expect sales to increase at a rate of around 10% on a currency-neutral basis, driven by double-digit growth in North America and Asia-Pacific. The company's gross margin is forecast to increase up to 0.3 percentage points to a level of up to 50.7%. Gross margin will benefit from the positive effects of a more favourable pricing, channel and regional mix.

Net income from continuing operations is projected to increase to a level between EUR 1.615 billion and EUR 1.675 billion. This development reflects an increase of between 13% and 17% compared to the prior year level of EUR 1.430 billion, excluding the negative one-time tax impact recorded in 2017.       

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