News Column

Russia tensions kick Adidas to profit warning

August 1, 2014

KASMIRA JEFFORD



ADIDAS shares plunged 15 per cent yesterday after the sportswear giant became the latest big European company to warn that the Ukraine crisis was taking a toll on the business.


The sportswear giant, which supplies kit to Premier League clubs such as Russian-owned Chelsea FC, warned that it would miss its profit and revenue targets this year due to its exposure to Russia and weak sales at its US golf business.


It expects net income attributable to shareholders to be around 30 per cent less than originally forecast at €650m (£515m) compared to between €830m-€930m before.


EU governments agreed earlier this week to impose a host of economic sanctions to cripple Russia's al-ready slowing economy following the downing of Malaysia Airlines flight MH17 this month by separatists armed with Russian missiles.


The group said it planned to scale back store openings in Russia, where it made around seven per cent of sales, due to a fall in the rouble since the start of the Ukraine crisis and "increasing risks to consumer sentiment". It added: "Current tensions… point to higher risks to the short-term profitability contribution from Russia."


Adidas also cut its expectations for its TaylorMade golf business after sales fell 18 per cent in the second quarter as the division suffered in part from slow sales of old stock.


Total sales rose by two per cent to €3.47bn in the second quarter while net income was €144m.


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Source: City A.M. (UK)


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