Adidas Group Q3 Net Falls 30% on Sales Declines Across Board

adidas Group sales declined 7% on a currency-neutral basis for the third quarter. Revenues for the adidas segment decreased 6% on a currency-neutral basis. Growth in the Sport Style division could not offset declines in major sports categories in the Sport Performance division. Currency-neutral revenues in the Reebok segment decreased 12% versus the prior year, as a result of declines in all divisions. Third quarter revenues for the TaylorMade-adidas Golf segment decreased 12% on a currency-neutral basis. This was mainly due to the challenging macroeconomic environment and the non-recurrence of sales related to several new product launches in the prior year period. Currency movements positively impacted Group sales in euro terms. Group revenues decreased 6% in euro terms to € 2.888 billion in the third quarter of 2009 from € 3.083 billion in 2008.

Third quarter diluted EPS € 1.03

The Group’s gross margin decreased 3.7 percentage points to 45.3% (2008: 49.0%) in the third quarter as a result of higher clearance sales, higher input costs and currency devaluation effects, in particular related to the Russian rouble. Group gross profit decreased 14% to € 1.307 billion (2008: € 1.511 billion). As a result of the lower gross margin as well as higher other operating expenses as a percentage of sales, the Group’s operating margin decreased 3.7 percentage points to 11.6% in the third quarter of 2009 versus 15.3% in the prior year. Operating profit decreased 29% to € 336 million versus € 473 million in 2008. In the third quarter of 2009, the Group’s net income attributable to shareholders decreased 30% to € 213 million (2008: € 302 million) mainly due to the Group’s lower operating profit. Diluted earnings per share for the third quarter declined 29% to € 1.03.

“This year, our industry and our Group have faced unprecedented challenges. However, we have tackled the challenges head-on,” commented Herbert Hainer, adidas Group CEO. “We have successfully adapted to our difficult surroundings. And our drive for operational excellence has meant we have strongly improved our financial position generating almost € 740 million in net cash from operations over the last six months.”

adidas Group currency-neutral sales decline 7% in first nine months

In the first nine months of 2009, Group revenues decreased 7% on a currency-neutral basis, as a result of lower sales in all business segments. The adidas segment decreased 7%, the Reebok segment 9% and the TaylorMade-adidas Golf segment 5%. Currency translation effects positively impacted sales in euro terms. Group revenues in euro terms declined 4% to € 7.923 billion in the first nine months of 2009 from € 8.225 billion in 2008.

Nine months net sales growth by segment

Currency-neutral sales decrease in nearly all regions

Currency-neutral adidas Group sales declined in all regions except Latin America in the first nine months of 2009. Group sales in Europe decreased 8% on a currency-neutral basis, due to declines in most major markets impacted by the non-recurrence of strong prior year sales related to the UEFA EURO 2008™. In North America, Group sales decreased 11% on a currency-neutral basis due to declines in both the USA and Canada. Sales for the adidas Group in Asia decreased 9% on a currency-neutral basis, mainly as a result of declines in Japan and China. In Latin America, sales grew 19% on a currency-neutral basis, with double-digit increases in most of the region’s major markets, supported by the new Reebok companies in Brazil/Paraguay and Argentina.

In euro terms, sales in Europe decreased 9% to € 3.442 billion in the first nine months of 2009 from € 3.776 billion in 2008. Sales in North America declined 3% to € 1.822 billion from € 1.871 billion in 2008. Revenues in Asia grew 1% to € 1.894 billion in the first nine months of 2009 from € 1.875 billion in 2008. Sales in Latin America grew 10% to € 713 million from € 647 million in the prior year.