Adidas raised its full-year earnings forecast after strong sales around the World Cup as well as a resurgence at Reebok helped drive up second-quarter revenues and profit. Group sales in North America grew 8% on a currency-neutral basis, driven by a 7% sales increase for adidas and a 30% sales increase for Reebok in the region during the second quarter.
Adidas now expects earnings per share for the full year of between €2.50 ($3.33) and €2.62 ($3.48), compared with a previous forecast of between €2.05 ($2.72) and €2.30 ($3.06). Last year's figure was €1.22 ($1.66).
The company, based in Herzogenaurach, Germany, confirmed previously released second-quarter figures: an increase in net earnings to €126 million ($160 million) from €9 million ($12.3 mm) a year earlier, and an 18.7 % increase in revenues to €2.92 billion ($3.72 billion) from €2.46 billion ($3.35 billion).
“We had an outstanding first half year driven by the FIFA World Cup 2010 and the resurgence of the Reebok brand in North America,” CEO Herbert Hainer said. “Sales momentum at both Adidas and Reebok accelerated in the second quarter.”
During the second quarter of 2010, Group revenues increased 11% on a currency-neutral basis. Currency-neutral revenues in Western Europe increased 13% supported by strong growth in the football category. Currency-neutral sales in European Emerging Markets increased 25% driven by double-digit growth in both the Wholesale and Retail segments.
Group sales in North America grew 8% on a currency-neutral basis, driven by a 7% sales increase for adidas and a 30% sales increase for Reebok in the region during the second quarter. Currency-neutral sales in Greater China declined 18% due to the continued efforts to reduce inventories in the market. Currency-neutral sales in Other Asian Markets and in Latin America were up 11% and 27% on a currency-neutral basis, respectively. Currency translation effects had a positive impact on segmental sales in euro terms.
Group revenues grew 19% to €2.917 billion ($3.72 billion) in the second quarter of 2010 from €2.457 billion ($3.46 billion) in 2009.
Second quarter diluted EPS at €0.60 ( 76 cents)
The Group's gross margin increased 4.0 percentage points to 48.9% (2009: 45.0%) in the second quarter mainly due to lower input costs, less clearance sales and a larger share of higher-margin Retail sales as well as positive currency effects, particularly related to the Russian rouble. Group gross profit increased 29% to €1.424 billion ($1.817 billion) (2009: €1.105 billion). Other operating expenses as a percentage of sales were stable compared to the prior year at 43.9%. Higher marketing expenses were offset by a decline in operating overhead expenditures as a percentage of sales. As a result of the higher gross margin, the Group's operating margin increased 3.8 percentage points to 6.7% in the second quarter of 2010 versus 2.9% in 2009. Operating profit increased 172% to €195 million ($248 mm) in the second quarter of 2010 compared to €2 million ($2.72 mm) in 2009. In the second quarter of 2010, the Group's net income attributable to shareholders amounted to €126 million ($161 mm) (2009: €9 million). Diluted earnings per share for the second quarter increased significantly to €0.60 ((76 cents) (2009: €0.06)).
“We had an outstanding first half year driven by the FIFA World Cup 2010 and the resurgence of the Reebok brand in North America,“ commented Herbert Hainer, adidas Group CEO. “Sales momentum at both adidas and Reebok accelerated in the second quarter with currency-neutral sales increasing 13% and 16% respectively.“
adidas Group currency-neutral sales increase 7% in the first half of 2010
In the first half of 2010, Group revenues increased 7% on a currency-neutral basis driven by growth in Wholesale, Retail and Other Businesses. Currency translation effects had a positive impact on sales in euro terms. Group revenues grew 11% to €5.590 billion ($7.437 billion) in the first half of 2010 from €5.034 billion ($6.721 billion) in 2009.
First half Group sales increase driven by the Wholesale and Retail segments
The adidas Group's sales increase in the first half of 2010 was driven by double-digit growth in the Retail segment as well as higher sales in the Wholesale segment and in Other Businesses. Currency-neutral Wholesale revenues increased 6% during the period driven by higher adidas and Reebok sales. Currency-neutral Retail sales increased 16% versus the prior year as a result of double-digit adidas and Reebok sales growth. Revenues in Other Businesses increased 3% on a currency-neutral basis due to sales growth at TaylorMade-adidas Golf.
Currency translation effects had a positive impact on segmental sales in euro terms. Wholesale revenues increased 10% to €3.826 billion ($5.090 billion)in the first half of 2010 from €3.480 billion ($4.646 billion) in 2009. Retail sales increased 20% to €1.061 billion ($1.411 billion) versus €886 million ($1.182 billion) in the prior year. Sales in Other Businesses grew 7% to €703 million ($935 mm) in the first half of 2010 (2009: €657 million).
| 1st Half Year 2010 | 1st Half Year 2009 | Change y-o-y in euro terms | Change y-o-y currency-neutral |
| € in millions | € in millions | in % | in % |
Wholesale | 3,826 | 3,480 | 10 | 6 |
Retail | 1,061 | 886 | 20 | 16 |
Other Businesses | 703 | 657 | 7 | 3 |
Total1) | 5,590 | 5,034 | 11 | 7 |
First half year net sales growth by segment
1) Including HQ/Consolidation.
Currency-neutral sales increase in nearly all regions
In the first half of 2010, currency-neutral adidas Group sales increased in all regions except Greater China. Revenues in Western Europe increased 8% primarily as a result of double-digit sales increases in the UK, Germany and Spain. In European Emerging Markets, Group sales increased 13% on a currency-neutral basis due to growth in most of the region's markets, in particular Russia. Sales for the adidas Group in North America increased 10% on a currency-neutral basis due to strong increases in both the USA and Canada. Sales in Greater China decreased 16% on a currency-neutral basis. Currency-neutral revenues in Other Asian Markets grew 4% due to increases in most markets. In Latin America, sales grew 23% on a currency-neutral basis, with double-digit increases in most of the region's major markets.
Currency translation effects had a positive impact on regional sales in euro terms. Group revenues in Western Europe increased 10% to €1.772 billion ($2.357 billion) in the first half of 2010 from €1.618 billion ($2.160 billion) in 2009. In European Emerging Markets, sales grew 15% to €633 million ($842 mm) in the first half of 2010 from €549 million ($733 mm) in 2009. Sales in North America increased 12% to €1.312 billion ($1.745 billion) from €1.169 billion ($1.560 billion) in 2009. Revenues in Greater China decreased 16% to €403 million ($536 mm) in the first half of 2010 from €481 million ($642 mm) in 2009. In Other Asian Markets, sales increased 14% to €868 million ($1.154 billion) versus €764 million ($1.020 billion) in the prior year. Revenues in Latin America grew 36% to €601 million ($800 mm) from €443 million ($591 mm) in the prior year.
| 1st Half Year 2010 | 1st Half Year 2009 | Change y-o-y | Change y-o-y currency-neutral |
| € in millions | € in millions | in % | in % |
Western Europe | 1,772 | 1,618 | 10 | 8 |
European Emerging Markets | 633 | 549 | 15 | 13 |
North America | 1,312 | 1,169 | 12 | 10 |
Greater China | 403 |
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