Sportswear giant Adidas Group has raised its full year sales and earning expectations for 2011, after a strong than expected first half performance that saw group sales increase 14% on a neutral currency basis.
Adidas reported that its net income attributable to shareholders was up 19% to a record €349m (£303.8m) and the group saw a 14% currency-neutral year-to-date sales increase at both its Adidas and Reebok brands.
The group’s currency-neutral sales in emerging European markets rose by 21% as a result of strong increases at both Adidas and Reebok, and grew by 5% in North America, while currency-neutral sales in Greater China rose 41% supported by growth in all major categories. Currency-neutral revenues in other Asian markets and Latin America grew 6% and 8%, respectively.
Adidas Group’s gross margin remained stable at 48.8% in the first half of 2011, positively impacted by a larger share of higher-margin retail sales as well as a more favourable product and regional sales mix, which offset an increase in input costs. Gross profit grew 13% in the first half of 2011 to €3.093bn (£2.693bn).
The Group’ management now forecasts sales will increase at around 10% on a currency-neutral basis in 2011. It said that high exposure to fast-growing emerging markets, the further expansion of retail as well as continued momentum at all key brands would offset the non-recurrence of sales related to the 2010 FIFA World Cup. Like-for like currency neutral wholesale segment revenues are expected to increase at a high single digit rate off the back of strong performance in Greater China and North America and a less severe decline in Japan that it had expected. The group’s gross margin is forecasted to reach a level between 47.5% and 48.0% in 2011.
Herbert Hainer, Adidas Group chief executive, said that “despite severe external pressures from currency volatility and rising commodity prices, we were able to defend our profitability as a result of our unparalleled strength in innovation and design as well as supply chain excellence.”
He added: “After the strong first half performance, we are on our way to record sales and earnings in 2011. This is all the more notable as various currencies have been weakening versus the euro, which negatively impacts our financial results in the short term.”