May 6, 2014
Adidas hit by sales drop at golf business
May 6, 2014
BERLIN, Germany - German sportswear company Adidas reported disappointing first-quarter results on Tuesday due to a big drop in sales at its TaylorMade golf business, but said a stronger second quarter was signalling a return to growth. The world's second-biggest sportswear firm, which has been losing ground to market leader Nike, said net profit fell by a third to 204 million euros ($283 million) as sales contracted by 6 percent to 3.533 billion euros.
Net profit fell short of an average analyst forecast of 217 million euros and sales were at the low end of analyst estimates of 3.5-3.6 billion. Adidas said the falls were largely due to a double-digit sales drop at TaylorMade after it moved to "realign shipment, product and launch cycles to market demand patterns". California-based TaylorMade, a brand Adidas bought in 1997 to help it compete with Nike, is the biggest maker of golf bags, clubs, clothing and shoes in the world, but still only contributes a small portion of Adidas group's total sales.
Chief Executive Herbert Hainer said the issues at TaylorMade and the impact of falling currencies, particularly the Russian rouble, masked strong performances in emerging markets and the company's own retail network, which saw currency-neutral sales jump 22 percent. "While we still have to be wary of currencies and their effects on our financials, I expect a strong second quarter to point the way forward to a sustained period of growth and momentum for our Group," he said in a statement.
The 10th biggest investor in Adidas called on Sunday for a shareholder revolt against management at their annual meeting on Thursday due to the company's failure to catch up with Nike.
Adidas, which makes about half of its sales in developing markets, warned in March that weak currencies would hurt 2014 results and pose a risk to its 2015 targets, even as sales are helped by the soccer World Cup, which starts next month. ($1 = 0.7205 Euros).
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