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Adidas shares drop on disappointing results, co sticks to outlook

Reuters logo Reuters 08/08/2019
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German sportwear company Adidas reported disappointing second-quarter sales on Thursday but confirmed it expects a recovery in the second half after it stemmed a decline in Europe and saw its long-struggling Reebok brand recover. Adidas shares, which had rallied in recent weeks on hopes it might lift its outlook - particularly after German rival Puma raised its sales and profit forecasts - were down 3.5% in early trade at 0624 GMT.

Second-quarter sales rose a currency-adjusted 4% to 5.51 billion euros (5.08 billion pounds), slightly shy of average analyst forecasts for 5.54 billion as the company saw a strong fall in the soccer category a year on from the World Cup.

a group of different colored shoes: FILE PHOTO: Adidas soccer shoes are displayed at soccer shop KAMO in Tokyo © Reuters/Kim Kyung Hoon FILE PHOTO: Adidas soccer shoes are displayed at soccer shop KAMO in Tokyo Adidas had already warned in March that supply chain issues would hit sales growth in the first half, citing particular problems meeting North America demand for mid-market clothing.

The company said it was confident sales would accelerate in the second half, allowing it to confirm a full-year outlook for currency-neutral sales growth of 5-8% and net income from continuing operations of between 1.88 and 1.95 billion euros.

Quarterly net profit from continuing operations rose 10% to 462 million, helped by another quarter of strong growth for ecommerce, where sales rose 37%. Margins are higher for online sales than wholesale.

Reebok sales rose 3%, driven by the popularity of retro styles, particularly in North America, where the brand expanded 10%, and in emerging markets.

Group sales were flat in Europe, recovering from a 3% fall in the first quarter after Adidas took steps to reduce its reliance on its Originals fashion line and boost sales of sports performance gear, with new product launches.

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