• Q3 earnings up 10% to EUR311m (US$338m)
  • Gross margin widens to 48.4%
  • Sales grow 13% to EUR4.76bn
  • Ups FY sales, margin and profit guidance
  • To cut 14% of TaylorMade global workforce
Adidas will cut the global workforce of its TaylorMade golf division

Adidas will cut the global workforce of its TaylorMade golf division

German sportswear giant Adidas Group has upped its full-year guidance thanks to higher third-quarter sales, but revealed plans to cut 14% of the workforce at its struggling TaylorMade golf division in a bid to boost earnings. 

Adidas this morning (5 November) raised its full-year revenue, gross margin and net income targets as it revealed a 10% increase in earnings to EUR311m (US$338m) for the three months ended 30 September, boosted by sales growth in China and western Europe. 

Gross margin reached 48.4% from 47.4% in the prior year, driven by a more favourable pricing and channel mix, and partly offset by higher input costs and negative currency effects. Group sales grew 13% to EUR4.76bn.

For the full year, Adidas said it expects sales to increase at a high-single-digit rate from a previous mid-single digit rate in 2015 thanks to strong momentum at both Adidas at Reebok. Gross margin is forecast to increase to between 48% and 48.5% from a previous forecast of 47.5% and 48.5%. Development, however, is expected to be impacted by currency, higher input costs, and lower product margins and the group's TaylorMade golf unit.

As a result, the company has said it will reduce the division's global workforce by 14% by the end of the year.

“While this will negatively impact the group’s profitability by a low-double-digit million euro amount in the fourth quarter, the result will be a more nimble organisation which will have a positive impact on the group’s profitability from 2016 onwards.”

Despite restructuring costs at TaylorMade, and increased marketing investments, Adidas said it expects net income to increase at a rate of around 10% from a previous forecast of between 7% and 10%.

"The investments into our brands and a leaner golf organisation will directly fuel next year's top- and bottom-line performance and set us up for sustainable profitability improvements from 2016 onwards,” said CEO Herbert Hainer.

Adidas also said it would extend the contract of Roland Auschel, head of global sales by three years to 2019. He is widely expected to be a candidate to succeed Hainer, along with Eric Liedtke, head of global brands. The company said in February it had hired recruiter Egon Zehnder to find a new CEO. Hainer has faced investor pressure over struggles to meet profit targets as Adidas continues to lose ground to rival Nike.