GERMANY: Adidas growth on track and reaffirms targets
Adidas expects sales to grow at a high-single-digit currency-neutral rate in 2014
At the half-way point along its five-year Route 2015 business plan, sporting goods giant Adidas has reconfirmed its targets but says it needs to accelerate growth and focus on profitability in order to achieve them.
Route 2015 forecasts sales of EUR17bn (US$23.1bn) in 2015 and an operating margin of 11%.
However, the company has been hit by a number of headwinds during the current year, issuing a profit warning in September as it struggles with distribution issues in Russia, a weak golf market and unfavourable exchange rates.
Adidas most recently reported a drop in both profits and revenues in the third quarter.
Speaking to investors yesterday (3 December), the world's second-largest sportswear maker confirmed full-year 2013 forecasts for sales growth at a low-single-digit rate on a currency-neutral basis.
Operating margin is expected to increase to around 8.5%, with earnings per share rising 4-7% to between EUR3.92 and EUR4.06. This represents net income of EUR820m to EUR850m.
Looking ahead to 2014, it said it expects operating margin to rise by around one percentage point year-on-year in 2014, with sales rising at a high-single-digit currency-neutral rate.
Growth is expected in all of its brands, regions and markets, with running and football as key drivers.
"The goal of our strategic business plan Route 2015 is to prepare and transform the Group for long-term sustainable growth and success," said Adidas CEO Herbert Hainer. "We will continue to focus on building desirable brands and exciting our consumers at every touch point."
The group also outlined its 2014 goals for its Sports Performance, Originals and Reebok categories.
The Boost cushioning technology will be integrated into all performance running shoes, Adidas says, and will also be introduced to other categories, including basketball footwear in 2014. Total Boost volumes are expected to reach 15m pairs in 2015.
In football, Adidas will launch "cutting-edge performance products" in the run-up to the 2014 FIFA World Cup. The brand expects to achieve record sales and to be the first to break through the EUR2bn sales barrier with football performance products.
Adidas also intends to expand action sports within its Originals business, and introduce Boost technology into snowboarding boots in autumn/winter 2014.
In retail, a new Sport Performance retail concept called ‘Home Court’ will premiere in January 2014, and Adidas Originals will roll out a new ‘Neighbourhood’ store concept to 31 cities worldwide, starting with Berlin in spring 2014.
And the Neo lifestyle label for teenagers, which is available at more than 1,300 stand-alone stores in China, will be expanded across Germany, Poland and the Czech Republic next year.
Meanwhile, the repositioning of Reebok as a fitness and training brand will continue, with the new FitHub retail format extended throughout 2014. Growth is set to be driven by Russia/CIS, North America and Latin America, and sales are expected to reach EUR2bn in 2015.
"We are fully equipped and ready to move forward in the second half of our Route 2015 plan. We will again accelerate our growth and focus on profitability to achieve our targets," Hainer added.
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