Adidas jumps as sneaker, sportswear sales drive profit upgrade

[FRANKFURT] Adidas AG shares rose after the German sneaker maker increased its revenue and profit forecasts, helped by strong sportswear sales and a brand streamlining that includes a disposal of the CCM hockey business.

The company expects net income from continuing operations to rise 26 per cent to 28 per cent for the full year, up from as much as 15 per cent, it said late Thursday. The shares climbed as much as 7.4 per cent in early Frankfurt trading on Friday.

Adidas is benefiting from booming demand for retro shoes and a steady stream of new models that made the brand a hot commodity in the US, helping it regain ground it earlier lost to industry leader Nike.

The German company is also capitalising on a growing middle class in China, which is adopting a more active lifestyle, and strong demand for more fashionable sportswear worn outside of gyms.

"Adidas continues to see very strong momentum, defying the gravity in the global sporting-goods market troubled by a slowdown in the US," Berenberg analyst Zuzanna Pusz said in a note to clients.

Second-quarter sales from continuing operations surged 20 per cent to 5 billion euros (S$7.94797 billion), Adidas said in a statement, while operating profit rose 18 per cent to 505 million euros.

Under the new forecast, net income from continuing operations will increase to 1.36 billion euros to 1.39 billion euros for the full year, Adidas said.

Sales, excluding currency swings, are expected to grow 17 per cent to 19 per cent, up from as much as 14 per cent.

Earlier Thursday, Adidas said it agreed to sell its CCM hockey unit to Canadian private-equity firm Birch Hill Equity Partners for US$110 million.

It is also in the process of selling its golf brands, and both businesses are now reported as discontinued operations.

Adidas followed German rival Puma SE, which on July 17 lifted its forecast for a second time this year. Adidas will report detailed financial results Aug 3.

BLOOMBERG