News Column

Adidas on wrong foot with major sales drop

August 1, 2014

FRANKFURT: German sportswear and equipment maker Adidas issued a profit warning for the year yesterday due to geopolitical tensions and troubles in its golf division, sending its shares tumbling more than 11 percent.

The company said net profit for the year would only reach about e650 million, much lower than the e830-930 million originally forecast.

Sales are expected to climb from 5 to 10 percent, adjusted for currency effects.

Adidas warned that the crisis in Ukraine and Western tensions with Russia, one of the company's key markets, would weigh on its business.

In another cause for concern, sales for the group's golf division sank 18 percent in the second quarter, wiping out strong turnover for the Adidas and Reebok brands.

Group sales only grew 2 percent between April and June to e3.46 billion, despite the boost offered by the World Cup. Adidas is a major Fifa sponsor.

Shares in the company plunged 11.4 percent to e62.18 in morning trade on the Frankfurt stock exchange in the news. The Dax index was down 0.45 percent.

Chief executive Herbert Hainer said despite a few highlights on the balance sheet, "we also accept that we have not executed to our high standards at all times". The company is to release its detailed earnings data for the second quarter next Thursday. - Sapa-AFP

Cape Argus

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Source: Cape Argus (South Africa)

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