Adidas shares jump as North America growth outpaces Nike

The World Cup boosted Adidas sales while North Amercia performed especially well. (Reuters)
Updated 09 August 2018

Adidas shares jump as North America growth outpaces Nike

  • Shares surge on earnings
  • Greater China sales growth accelerates to 27 percent

BERLIN: German sportswear firm Adidas reported higher than expected second-quarter results on Thursday, as its sales growth continued to outpace rival Nike in North America even as it stagnated in western Europe.

Shares in the company famous for its three-stripe brand jumped 10 percent to a four-month high, before paring gains.

The results are the latest endorsement of a strategy implemented by CEO Kasper Rorsted since taking over in 2016, focused on improving profitability as well as expanding in North America and China and pushing sales via ecommerce.

Adidas has a strong pipeline of new products that will support sales this year and beyond, Rorsted told journalists, noting strong demand for its 1980s retro “Continental” leather sneakers that were relaunched in June.

“Full-year guidance reconfirmed ... which should reassure investors ... particularly given Adidas will have good visibility on the important third-quarter wholesale order book,” said Piral Dadhania, analyst at Royal Bank of Canada.

Sales rose 10 percent to €5.26 billion ($6 billion) after currency effects, beating the 8 percent expected by analysts.

Some analysts had expected higher marketing spending in the quarter due to the soccer World Cup would dent the bottom line, but Adidas counteracted that with higher prices and sales through more profitable channels such as ecommerce.

Adidas saw sales growth in North America slow slightly to 16 percent, but that was still well ahead of the 3 percent growth Nike reported for its March to May fiscal fourth quarter, the firm’s first increase in the region for a year.

In greater China, Adidas sales growth accelerated to 27 percent, slightly ahead of Nike’s 25 percent.

As Adidas had previously cautioned, sales were flat in western Europe, where Nike has been growing faster, but they jumped 14 percent in Russia, which hosted the World Cup.
Adidas has made management changes in western Europe after the company failed to focus enough on the launch of new products, Rorsted said, adding sales were likely to stay flat in the region in the second half of the year.

Nike teams dominated the final rounds of the World Cup, but Rorsted said the tournament was still a success as Adidas sold more than 8 million shirts and more than 10 million balls, and saw a boost to downloads of its app, advertised in stadiums.

Adidas said it was taking an impairment of 475 million euros related to the Reebok trademark in 2016 after the German Financial Reporting Enforcement Panel disagreed with how it calculated historical book value.

But it said the restatement had no impact on its cash position and reiterated its guidance for 2018 and beyond, adding Reebok’s prospects were unchanged. Rorsted noted that sales in North America rose 6 percent despite many store closures.

Adidas bought the Reebok brand in 2005, but it has performed poorly since. Rorsted has given Reebok until 2020 to return to profitability and said it should be helped by a new partnership with British designer Victoria Beckham.


Indonesia’s anti-trust watchdog levies $3 million in fines on Grab and partner

Updated 03 July 2020

Indonesia’s anti-trust watchdog levies $3 million in fines on Grab and partner

  • Grab infringed the anti-monopoly laws after evaluating the case
  • Grab is Southeast Asia’s most valuable startup with a valuation of $14 billion

JAKARTA: Indonesia’s anti-trust watchdog announced fines totaling more than $3 million for Grab and its business partner after finding it guilty of breaking anti-monopoly laws, a verdict the ride-hailing firm vowed to appeal.
The Business Competition Supervisory Commission (KPPU) said it had found Grab had discriminated against its drivers, prioritizing those provided by partner PT Teknologi Pengangkutan Indonesia (TPI) to the Softbank-backed firm.
In a statement, Dinni Melanie, the chair of the watchdog judicial panel, said it had found Grab infringed the anti-monopoly laws after evaluating the case on Thursday evening.
The agency imposed a fine of $2.1 million on Grab and a penalty of $1.03 million rupiah on TPI.
A spokesman for Grab, which is Southeast Asia’s most valuable startup with a valuation of $14 billion, said the firm would appeal the verdict.
“Grab’s view is that it has not violated any regulation, engaged in any anti-competitive business practices, or injured any third parties,” he said, characterizing the watchdog’s findings as “unsubstantiated allegations.”
Reuters could not immediately reach TPI to seek comment.