Adidas Group revenues increased 10 percent on a currency-neutral basis in the second quarter ended June 30, driven by double-digit sales increases in Wholesale and Retail. All regions contributed to the currency-neutral revenue growth, despite rapidly falling golf sales and geopolitical problems in Russia that prmompted Adidas to issue a profit warnings last week.

Sales in Western Europe increased 13 percent, mainly as a result of double-digit sales increases in Germany, the UK, Spain and Italy. In European Emerging Markets, currency-neutral revenues were up 14 percent, driven by double-digit growth in Russia/CIS. Group sales in North America increased 1 percent on a currency- neutral basis, as high-single-digit sales growth at Adidas was partly offset by declines at TaylorMade-Adidas Golf. In Greater China, Group sales were up 11 percent on a currency- neutral basis, due to continued momentum across all channels. Currency-neutral revenues in Other Asian Markets remained stable as sales increases in South Korea and Australia were offset by declines in Japan and Indonesia. In Latin America, currency-neutral sales grew 33 percent, with double-digit increases in all of the region’s key markets.
 
 
From a brand perspective, both Adidas and Reebok gained significant momentum during the quarter. In particular the Adidas brand benefited from sales related to the 2014 FIFA World Cup. As a result, second quarter sales at Adidas increased 14 percent on a currency-neutral basis. Sales at Reebok grew 9 percent on a currency-neutral basis, driven by sustained sales momentum in the fitness training, walking and studio categories as well as at Classics.
 
 
Revenues in the TaylorMade-Adidas Golf segment declined 18 percent on a currency-neutral basis, as a result of the continued weakness in the golf market, where retail inventories remain high and participation continues to decline. Rockport sales decreased 1 percent currency-neutral and revenues at Reebok-CCM Hockey increased 1 percent on a currency-neutral basis. Currency translation effects had a negative impact on sales in euro terms. Group revenues increased 2 percent to € 3.465 billion in the second quarter of 2014 from € 3.383 billion in 2013.

 

Second quarter gross margin decreases 90 basis points
The Group’s gross margin decreased 0.9 percentage points to 49.2 percent (2013: 50.1 percent) in the second quarter, mainly as a result of lower margins in the Retail segment and at TaylorMade-Adidas Golf. In addition, negative effects resulting from less favourable hedging rates and foreign currency devaluation as well as higher input costs impacted the   Group’s   gross   margin   development.   Group   gross   profit   increased   1 percent   to € 1.704 billion (2013: € 1.694 billion).
 
 
Other operating expenses as a percentage of sales increased 0.3 percentage points to 44.6 percent compared to 44.3 percent the prior year. In euro terms, other operating expenses increased 3 percent to € 1.546 billion, mainly as a result of higher marketing working budget expenditure. In addition, higher expenditure related to the expansion of the Group’s own-retail activities contributed to the increase in other operating expenses.
 
 
The Group’s operating profit declined 13 percent to € 220 million (2013:  €  252  million)  in  the  second  quarter.  The  operating  margin  decreased 1.1 percentage points to 6.3 percent from 7.4 percent in 2013. Basic and diluted earnings per share for the second quarter decreased 16 percent to € 0.69 (2013: € 0.82).
 
 
“Overall, we had a good quarter, with increasing momentum across most of our business units and markets as expected. Of particular note, sales increased in all regions during the period,” commented Herbert Hainer, Adidas Group CEO.
 
 
Adidas Group currency-neutral sales increase 5 percent in the first half of 2014
In the first half of 2014, Group revenues increased 5 percent on a currency-neutral basis, driven by sales increases in Wholesale and Retail. Currency translation effects had a negative impact on sales in euro terms. Group revenues decreased 2 percent to € 6.998 billion in the first half of 2014 from € 7.134 billion in 2013.
 
In the first half of 2014, currency-neutral Wholesale revenues increased 5 percent, driven by sales growth at both Adidas and Reebok. Currency-neutral Retail sales were up 22 percent versus the prior year as a result of double-digit sales increases at Adidas and Reebok. Revenues in Other Businesses were down 19 percent on a currency-neutral basis, due to double-digit sales declines at TaylorMade-Adidas Golf. Currency translation effects had a negative impact on segmental sales in euro terms.
 
 

 

First Half Year 2014

First Half Year 2013

Change y-o-y in euro terms

Change y-o-y currency- neutral

€ in millions

€ in millions

in %

in %

Wholesale

4,442

4,495

(1)

5

Retail

1,752

1,589

10

22

Other Businesses

804

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